Vishal Wagh, Research Head, Bonanza Portfolio
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.
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments
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.
Poonam Tandon, CIO, IndiaFirst Life Insurance Company:
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.
Rupee Close:
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.
Jateen Trivedi, Senior Research Analyst at LKP Securities:
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.
S Ranganathan, Head of Research at LKP securities:
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.
Market Close
: 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.
Ashis Biswas, Head of Technical Research at CapitalVia Global Research:
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.
Shishir Baijal, Chairman & Managing Director, Knight Frank India:
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.
Market At 3 PM
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.
Rupee Updates:
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.
Power Mech Projects share price jumps 11%:
Power Mech Projects share price jumped over 11 percent intraday on June 4, a day after HDFC Mutual Fund bought 1.3 lakh equity shares of the company.
HDFC MF, on June 3, purchased 130,000 shares, representing 0.88 percent stake, in Power Mech Projects for Rs 8.22 crore. The mutual fund had bought these shares at price of Rs 633 per share via block deals on the NSE, exchange data showed.
Bull run may continue but money managers advise caution
The bull run in the stock market may continue as long-term fundamentals are strong but investors need to tone down their expectations and brace for some volatility as valuations are high and the trajectory of the pandemic is uncertain, experts said.
Money managers which Moneycontrol spoke to are not bearish, but cautious at current levels, and advise investors to book profits, and then re-enter at lower levels. Read more
Tapan Patel- Senior Analyst (Commodities), HDFC Securities:
Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were trading 0.49% up at $69.15 per barrel for the day. MCX Crude oil June futures rose by 0.86% at Rs 5055 by noon.
Crude oil prices are expected to trade sideways to up for the day with resistance at $70 and support at $68 per barrel. MCX Crude oil June has support at Rs. 4980 and resistance at Rs 5120.
Economist's Take on RBI Policy
"As was expected, there were no change in the headline monetary policy rates as also the stance. In his statement, the Governor acknowledges the growth risks and now projects a lower real GDP growth for the year at 9.5 percent. Inflation projections have been raised too. Given the current evolution of the growth-inflation dynamics, there was absolutely no scope for the RBI to change its policy rates. Instead, the RBI endeavoured to keep the system fluid with adequate liquidity and also targeting rescue operations for the most stressed sectors in the economy. Consequently, a liquidity window was opened up for the contact intensive sectors that continue to totter with the burden of the pandemic. SIDBI was provided with a special liquidity facility to on-lend to MSMEs, specially the smaller ones," saidIndranilPan, Chief Economist at YES Bank.
"To enable the government to borrow at attractive rates, another round of bond buying was announced under G-SAP 1.0 while a G-SAP 2.0 was announced. We think that over the current FY, the RBI will not have any leeway to change its interest rates to provide support to the economy. Instead, it will do whatever necessary to push credit and liquidity to the stressed areas of the economy so as to prevent erosion of the supply chains in the economy," he added.
Market update at 2 PM
: Sensex is down 178.45 points or 0.34% at 52053.98, and the Nifty shed 37.70 points or 0.24% at 15652.70. Bajaj Finserv, Coal India and ONGC are the top gainers while Adani Enterprises, SBI and Bharat Forge are the most active stocks.
Among the sectors, Bank Nifty shed a percent while the midcap and smallcap indices added half a percent each.
Bank Nifty came under pressure, down over a percent dragged by RBL Bank, IDFC First Bank, ICICI Bank
NIIT Q4
Consolidated net profit at Rs 46.5 crore against Rs 0.6 crore (YoY). Consolidated revenue was up 30.5 percent at Rs 275.5 crore against Rs 211.2 crore (YoY). Consolidated EBITDA came in at Rs 68.4 crore against Rs 2.1 crore (YoY). Consolidated EBITDA margin at 24.8 percent against 1 percent (YoY) .
European Markets Update:
European stocks inched higher on Friday in cautious trading ahead of US jobs data, with economic recovery hopes putting the main benchmark on course for its third weekly gain.
Buzzing:
Spandana Sphoorty Financial share price jumped nearly 17 percent on June 4 after Moneycontrol reported that Axis Bank was in talks to acquire the micro-financier.
Axis Bank is in talks to acquire Spandana Sphoorty, which is also reportedly open to exploring a complete sale, sources told Moneycontrol. Both sides were interested in the deal, which had been in the works for a while, the sources said.
BSE Capital Goods index gained 1 percent supported by the Bharat Forge, Finolex Cables, Lakshmi Machine Works:
Expert's Take on RBI Policy
"Lower for Longer is the message from the Reserve Bank of India.The Central bank's focus on Growth over inflation continued from the last policy meet in April," saidKunalValia, Advisor, Smart Beta and Index Strategies at WaterfieldAdvisors.
"During the current year so far, the RBI has undertaken regular OMOs and injected additional liquidity to the tune of Rs 36,545 crore (up to May 31) in addition to Rs 60,000 crore under G-SAP 1.0. RBI further announced bond purchases of Rs 40000 crore under G-SAP 1.0 in June 2021.It has also been decided to undertake G-SAP 2.0 in Q2:2021-22 and conduct secondary market purchase operations of Rs 1.20 lakh crore to support the market," he added.
Market at 1 PM
Benchmark indices were trading marginally lower in the afternoon trade after RBI kept the rates unchanged.
At 13:00 IST, the Sensex was down 59.56 points or 0.11% at 52172.87, and the Nifty was down 5.20 points or 0.03% at 15685.20. About 1685 shares have advanced, 1144 shares declined, and 124 shares are unchanged.
ONGC, Grasim, Coal India, L&T and IOC were among major gainers, while losers were Nestle, Hindalco, Titan Company, HUL and HDFC Bank.
Oil & gas and capital goods indices added 1 percent each, while bank stocks were under pressure.
Likhita Chepa, Senior Research Analyst, CapitalVia Global Research:
After the Reserve Bank of India's (RBI) Monetary Policy Committee kept policy rates steady at its bi-monthly review, Indian equities benchmarks managed to keep their heads in the green in the morning session. The central bank's policy stance has remained accommodative in an effort to keep liquidity in the economy as the country recovers from the covid-19 outbreak and its economic consequences.
Investors in the US markets took a cautious stance over the inflation worries in the market. Asian markets were trading mostly in red following the negative cues overnight from Wall Street.
After the initial positivity in the market, Nifty 50 index could not hold the higher levels and is trying to hold the support near the level of 15650. If the market is unable to sustain the level of 15650, we will see a small correction in the market till the levels of 15500. On the sectoral front there is no clear direction. ONGC and Coal India are the top gainers while Nestle and Hindalco are the top losers on Nifty.
Bank of India Q4 earnings:
The bank has reported net profit at Rs 250.2 crore in Q4FY21 against loss of Rs 3,571.4 crore in the same quarter last fiscal.
Net Interest Income (NII) was down 22.6% at Rs 2,936 crore versus Rs 3,793 crore.
Gross NPA was at 13.77% versus 14.59% and net NPA at 3.35% versus 3.73%, QoQ.
At 12:29 hrs Bank Of India was quoting at Rs 83.40, up Rs 3.20, or 3.99 percent on the BSE.
BSE Oil & Gas index added 1 percent led by the Castrol, GSPL, HPCL
Bharat Forge Q4:
Bharat Forge in the quarter ended March 2021 reported net profit at Rs 205.4 crore against loss of Rs 73.3 crore in a year ago period,
Revenue of the company was up 48.4% at Rs 1,307 crore versus Rs 881.2 crore (YoY), reported CNBC-TV18.
Bharat Forge touched 52-week high of Rs 749 and quoting at Rs 745.65, up Rs 49.80, or 7.16 percent.
Market at 12 PM
Benchmark indices are trading with marginal losses after Reserve Bank of India kept its key rates unchanged.
At 12:02 IST, the Sensex was down 83.20 points or 0.16% at 52149.23, and the Nifty was down 19.70 points or 0.13% at 15670.70. About 1610 shares have advanced, 1166 shares declined, and 119 shares are unchanged.
ONGC, Coal India, IOC, BPCL and L&T were among major gainers, while losers included Nestle, Hindalco, Tata Steel, ICICI Bank and HUL.
Buying seen in the auto, energy, IT names, while bank and metal stock under pressure.
JUST IN |
Government considers divestment in 10 more PSUs, either via privatization or offer for sale (OFS). DIPAM & NITI Aayog to draw roadmap on new additions to divestment list, quoting Sources, reported CNBC-TV18.
Hotels, travel services stocks gain 1-7%
Hotels, restaurants, and travel services providers shares gained 1-7 percent on June 4 after the Reserve Bank of India announced a separate liquidity window of Rs 15,000 crore for the COVID-hit hospitality sector. Click to Read More
Amar Ambani, Senior President and Head of Research – Institutional Equities, Yes Securities:
With growth slowing and rise in inflationary pressures, RBI expectedly kept a status quo on the policy rates and maintained accommodative stance, signalling continuation of easy financial conditions. Downward revision in FY22 GDP growth projection to 9.5% was quite expected, but seems little optimistic when compared with consensus estimates. Nevertheless, RBI pursued its broad intent of plugging weak spots in the economy by providing on tap liquidity with additional lending to distressed and contact-sensitive sectors.
On inflation, the CPI projection of an average of 5.1% for FY22 looks credible as higher oil and commodity prices is leading to elevated price pressure. Though healthy monsoon and higher crop output may somewhat contain food inflation. Announcement of another round of G-SAP and devolvement of various bond auctions clearly convey RBI’s stance on interest rates and government borrowing costs.
On the repo rate, we have hit the floor, with further rate cut completely ruled out given the prevalent negative real interest rates. With the space for traditional monetary policy being constricted, we expect the RBI to continue to use its balance sheet to keep financial market conditions easy.
Gold Updates:
Gold slipped to its lowest in more than two weeks on Friday, weighed down by a stronger dollar, while investors awaited US non-farm payrolls data for May as bets over possible tapering of stimulus measures by the Federal Reserve loom.
Buzzing
Oil and Natural Gas Corporation (ONGC) share price touched a 52-week high of Rs 126.65. Foreign broking house JPMorgan has maintained buy call on the stock with a target at Rs 190 per share.
The complete pass-through of $70 per barrel, discount to brent should narrow, said JPMorgan.
The oil prices outlook is firmly biased towards the upside and see a large consensus earnings upgrade cycle ahead.
Market update
: Sensex is down 30.85 points or 0.06% at 52201.58, and the Nifty shed 5.60 points or 0.04% at 15684.80. Coal India, Larsen & Toubro and ONGC are the top gainers while Adani Enterprises, State Bank of India and Muthoot Finance are the most active stocks.
Among the sectors, Bank Nifty shed half a percent while auto and IT stocks edge higher. Midcap and smallcap indices are also trading in the green.
Sandeep Bagla, CEO Trust AMC:
RBI has maintained accommodative stance, keeping all rates unchanged, vowing to keep conditions as supportive as possible to revive growth. Impact of second wave on inflation could be handled through supply side measures. The policy bodes well for financial assets as well as the real economy, growth and employment as RBI has again stated its resolve to maintain conducive conditions to support durable growth. The policy is pragmatic, at the same time progressive and preemptive in its approach.
FY22 earnings can see a downgrade, experts expect Nifty EPS at around Rs 700
The second COVID-19 wave has dealt a blow to the economy, with several rating agencies and brokerage firms, including Moody’s, S&P, Nomura and Goldman Sachs, trimming their FY22 growth forecast for India.
The COVID-induced pain will be reflected in the Q1FY22 corporate earnings of the Indian Inc, however, due to low base, year-on-year the numbers may still be better, analysts say. Read more
Buzzing
PNB Housing Finance stock is on a roll. The scrip has surged 70 percent in the last five days and has been hitting upper circuit after the board approved raising Rs 4,000 crore from entities affiliated to the US-based The Carlyle Group. Click to Read More
RBI
| RBI to conduct another operation under G-SAP 1.0 for Rs 40,000 crore on June 17 and also to conduct Rs 1.2 lakh crore in Q2. RBI expect market to respond positively to G-SAP 2.0.
ICICI Direct:
After appreciating almost 17 paise, USDINR moved towards its support of 73. As the Dollar index fell sharply, we feel the rupee should move towards 73.5 levels.
The dollar-rupee June contract on the NSE was at Rs 73.11 in the last session. The open interest rose 1.6% for the June series.
BSE Realty Index gained 1 percent with all stocks trading in the green
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments:
The Nifty is trading above 15700 this morning. It is all poised to achieve 15900-16000 as its next target. The index has a good support at 15300 and as long as we can respect that, every dip can be utilized to buy into this market.
Intraday profit booking or mild corrections cannot be ruled out. Hence traders should look at dips to accumulate long positions, so that the risk reward ratio is favorable.
RBI
| The real GDP contraction was at 7.3% for FY21. The Reserve Bank of India (RBI) has reduced Q1FY22 GDP forecast to 18.5% from 26.2% and FY22 GDP forecast reduced to 9.5% from 10.5% earlier.
Market Updates at 10 AM:
Benchmark indices are trading higher with Nifty above 15700 after Reserve Bank of India (RBI) kept the repo rate unchanged at 4 percent and reverse repo rate unchanged at 3.35% with accommodative monetary policy stance.
At 10:09 IST, the Sensex was up 125.06 points or 0.24% at 52357.49, and the Nifty was up 34.50 points or 0.22% at 15724.90. About 1746 shares have advanced, 826 shares declined, and 111 shares are unchanged.
L&T, IndusInd Bank, Coal India, HDFC Life and ONGC are among major gainers on the Nifty.
Except metal all other sectoral indices are trading in the green.
Rupee Opens:
Indian rupee opened lower at 73.02 per dollar on Friday against Thursday’s close of 72.91, amid flat trading seen in the domestic equity market asRBI has kept the repo rate unchanged at 4 percent.
Reserve Bank of India (RBI) has kept the repo rate unchanged at 4 percent and reverse repo rate unchanged at 3.35% with accommodative monetary policy stance.
On June 3, rupee ended at day's high at 72.91 per dollar against Wednesday's close of 73.08.
JUST IN
| Reserve Bank of India (RBI) has kept the repo rate unchanged at 4 percent and reverse repo rate unchanged at 3.35% with accommodative monetary policy stance
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
Two features of the market rally this year stand out: One, the rally has been steady with surprising lack of volatility; two, the broader market has been outperforming significantly. While the Nifty is up 12.22% YTD the Nifty Mid & Small-cap indices are up by 26.48% & 33.20% YTD respectively.
The spectacular performance of many mid-small-cap firms in Q4 FY21 and positive commentaries by managements have created lot of interest in these segments. Active retail participation in the broader market also is a significant factor contributing to the exuberance. A disturbing aspect in this broader market rally is the retail investors buying low-grade small-cap stocks driven by the FOMO (Fear Of Missing Out) factor. Investors have to exercise caution.
Today's monetary policy announcement is unlikely to impact markets since it is likely to keep repo rate unchanged while continuing with the accommodative stance. However, some unconventional policy initiatives can be expected.
Market moving data is likely to come from the US job numbers expected today. US jobs data has implications for inflation, bond yields, Fed's likely policy moves and hence for financial markets globally.
