Closing Bell: Sensex, Nifty end marginally lower on status quo policy; metals shine

Taking Stock | Sensex Holds 52,000 In Volatile Session After RBI Leaves Key Rates Unchanged

RBI kept the repo rate and reverse repo rate unchanged at 4 percent and 3.35 percent, respectively, with an accommodative policy stance.... Read More

On Friday Indian equity benchmarks made a cautious start and are managing to trade above their neutral lines as traders remained on the sidelines ahead of the RBI's monetary policy outcome to be announced later in the day. But, soon markets lost their ground and slipped into red territory. In the afternoon session, Indian equity benchmarks continued their weak trade.

Chief Economic Advisor KV Subramanian has said the second wave of COVID-19 has affected the momentum of economic recovery. However, he also pointed out that he expects a recovery in the economy from July onwards.

The index has closed a few points below 15700 but the trend still remains positive and we should head to 15900-16000. The Nifty has multiple supports at 15600, 15400 and 15300. The most crucial of these is the 15300 level which needs to be respected on a closing basis. Intraday dips should be utilized to accumulate buy positions on the index for higher targets.

The RBI policy was largely on expected lines from the macro-economic perspective – maintained status quo on policy rates and keeping accommodative stance. CPI inflation is expected to remain in check for 1HFY22 largely due to the base effect. However, rising input prices could see inflation inching upwards in coming quarters.

GDP forecast has also been cut to 9.5% in FY22 versus 10.5% earlier factoring in the impact of the second wave. The central bank will continue with its proactive and pre-emptive approach to ensure the economy returns to growth and keeping ample liquidity to support growth – the focus is now shifting to equitable distribution of liquidity in the real economy.

Other measures include an on-tap liquidity facility of Rs 150 bn at repo rate for stressed sectors, allowing banks to park surplus liquidity with RBI at 40bp higher than the existing reverse repo rate, extending the eligibility restructuring limits for MSMEs from Rs 25 crore to Rs 50 crore and liquidity worth Rs 160 bn to SIDBI for on lending. GSAP 2.0 announced at 1.2 lakh crore in Q2, which is higher than G-SAP 1.0 and also includes State Development Loans (thus compressing the spreads of SDLs). Overall, RBI remains committed to growth and ensuring adequate liquidity in the system.

Indian rupee ended lower at 73 per dollar, amid selling saw in the domestic equity market after RBI kept the key rates unchanged.

It opened lower at 73.02 per dollar against Thursday’s close of 72.91 and traded in the range of 72.95-73.12.

Rupee traded in a narrow range of 72.95-73.05 as the broad market kept muted sessions in dollar index as well as financial market globally. The dollar index can take direction from US Non-farm payroll & Unemployment data later in the evening, which will guide the USDINR further next week. The range for rupee can be seen between 72.75-73.45.

As markets warmed up to Biden’s Tax proposal amidst encouraging payroll data, all eyes were set on the RBI Policy today morning which as expected held status quo and maintained its accommodative stance. The Sensex however flirted around the 52K mark even as the broader market witnessed selective buying interest in Unlock Themes with several states beginning to ease restrictions. Housing & Micro Finance entities were seen buzzing around amidst hectic activity in today's trade.

: Benchmark indices ended marginally lower on June 4 after Reserve Bank of India maintained status quo and keep its stance accommodative.

At close, the Sensex was down 132.38 points or 0.25% at 52,100.05, and the Nifty was down 20.10 points or 0.13% at 15,670.30. About 1832 shares have advanced, 1279 shares declined, and 138 shares are unchanged.

Nestle, HDFC Bank, SBI, Axis Bank and ICICI Bank were among the major losers on the Nifty, while gainers included Tata Motors, Grasim Industries, Bajaj Finserv, Coal India and ONGC.

Except bank and FMCG, all other sectoral indices ended higher. BSE Midcap and Smallcap indices rose over 0.5 percent each.

The market failed to show resilience to stay above the Nifty 50 Index level of 15700. While it is subject to further price action evolution, the technical factors are aligned to support a lackluster market movement going forward. Any corrective wave down should find support around 15300-15350.

As such, the traders are advised to refrain from building a fresh buying position until the market witnesses a correction till 15300-15350 level. Volatility is observed to expand in today’s trading session indicating profit booking and distribution of stocks at a higher market level.

We welcome the RBI’s move to maintain status quo on key policy interest rates. Although expected, the RBI has continued its growth supportive policy stance. Additional measures to enhance liquidity support to most vulnerable touch sensitive sectors and small businesses; and expanded credit exposure limit for resolution is a great move.

As the nation attempts to recover from the second wave of pandemic, there is a dire need to provide monetary policy support - on account of both easy availability and lower cost of funds - to households and businesses alike. Besides the monetary policy intervention, as we come out of graded regional lockdowns and further resume economic activities, there is a greater need to provide adequate fiscal support to jump start consumption demand.

Demand stimulant measure like credit subsidy or tax waivers even for a limited period can play a transformative role until we reach the pre COVID-19 normalcy thresholds.

Benchmark indices were trading lower with Sensex hovering around 52000 level dragged by the banking names.

At 15:01 IST, the Sensex was down 122.82 points or 0.24% at 52109.61, and the Nifty was down 14.90 points or 0.09% at 15675.50. About 1705 shares have advanced, 1202 shares declined, and 122 shares are unchanged.

Top gainers were Grasim Industries, Coal India, Bajaj Finserv, ONGC and Tata Motors, while losers included Nestle, ICICI Bank, SBI, HDFC Bank and Titan Company.

Except bank and FMCG all other sectoral indices were trading in the green.

RBI Monetary Policy: Rate Decision On Expected Lines, Then What Is Pulling The Market Lower From Record High?

What appears to have disappointed the market is the RBI's inflation projection, say experts. Read on to know what they feel could be the further course for the market... Read More

Indian rupee is trading lower at 73.07 per dollar, amid selling seen in the domestic equity market after RBI kept the key rates unchanged.

It opened lower at 73.02 per dollar against Thursday’s close of 72.91.