Sensex, Nifty fall ahead of RBI's policy decision; analysts say avoid aggressive bets

Banking sectors could benefit from the RBI's focus on liquidity management, while sectors sensitive to interest rate changes, such as real estate and infrastructure, may also see some impact

Domestic equity benchmarks the Sensex and the Nifty were trading lower on April 5 morning ahead of the Reserve Bank of India's (RBI's) monetary policy decision. Analysts remain confident about the market undertone, but advise investors to avoid aggressive positions in the near term.

The Sensex was down 240.66 points, or 0.32 percent, at 73,986.97, and the Nifty was down 78.20 points, or 0.35 percent, at 22,436.50. The market breadth was in favour of gainers, as around 1,496 shares advanced, 1,020 declined and 116 were unchanged.

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Deepak Jasani, Head of Retail Research, HDFC Securities, expects RBI's policy decision to be a non-event for markets, as the central bank is likely to keep interest rates unchanged for the seventh consecutive time.

"Most bankers and economists expect a status quo in key rates, and the majority of them expect the MPC to retain its policy stance of withdrawal of accommodation," he said.

Tracking muted global cues, Jasani expects the Nifty to remain in the 22,453-22,619 band for the near term.

Amidst market weakness, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services believe that banking stocks provide opportunities to buy. "The data regarding deposit and loan growth from banking majors, particularly HDFC Bank are positive. Small finance banks data also indicate a healthy trend," he added.

Meanwhile, broader markets were trading with slim gains within the first hour of trade. The Nifty Midcap 100 and Nifty Smallcap 100 indices gained up to 0.1 percent on April 5. Fear gauge India VIX gained over 3 percent to trade around 11.

All sectors swinged between gains and losses. Nifty Pharma index was the top sectoral performer led by Torrent Pharma, Dr Reddy's and Zydus Lifesciences.