Indian markets opened the day with a starkly mixed picture. The BSE Sensex surged over 450 points shortly after the opening bell, while the NSE Nifty posted only marginal gains as traders awaited the RBI's policy announcement.
Markets Open Higher Ahead Of RBI Policy; Sensex Rises Over 450 Points, Nifty Above 24,600
At 9:20 am, the BSE Sensex was up 451.73 points or 0.58 per cent at 78,880.68 while the NSE Nifty was up 20.60 points or 0.08 per cent at 24,635.50.
Benchmark indexes in India began higher on Wednesday, following positive global cues, lower crude oil prices and continuing foreign capital inflow, as investors anticipated the Reserve Bank of India’s (RBI) monetary policy decision scheduled at 10:00 am.
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At 9.20 am, the BSE Sensex was up 451.73 points or 0.58 per cent to 78,880.68, while the NSE Nifty up 20.60 points or 0.08 per cent to 24,635.50.
RBI's Monetary Policy Committee (MPC) decision will be declared at 10 am today. Investors are awaiting the decision. The repo rate is mostly expected to be held at 5.25 per cent by the central bank and market investors will keenly observe the remarks of Governor Sanjay Malhotra on inflation, GDP and liquidity.
The policy decision and guidance on the future rate trajectory will likely decide the direction of the market for the rest of the session.
Broader Markets Perform Better
Risk appetite remained high even as frontline indexes lagged broader markets in early trade. The Nifty Next 50 was up 0.59 per cent and the Nifty Smallcap 100 climbed 0.74 per cent.
Nifty Midcap 100 gained 0.28 per cent and Nifty 500 was up 0.26 per cent.
The India VIX decreased 4.22 per cent to 11.68, reflecting reduction of volatility expectations ahead of the policy announcement.
Sector Trends
Rate sensitive and domestic sectors seen showing signs of purchases. Realty was the top gaining sector with Nifty Realty index up 1.71 per cent, followed by Auto (0.79 per cent), Financial Services Ex-Bank (0.68 per cent), PSU Bank (0.58 per cent), Chemicals (0.55 per cent), Cement (0.57 per cent) and Oil & Gas (0.36 per cent).
Meanwhile, defensive sectors continued to come under pressure. Nifty Healthcare down 0.77 per cent, FMCG down 0.69 per cent, Pharma down 0.61 per cent Consumer Durables and Private Bank indexes were moderately lower.
Sentiment Supported by Global Markets
Wall Street closing at record highs overnight, boosted by solid corporate profits and renewed confidence in technology equities, provided support to global cues.
Asian markets were also considerably higher, with Japan’s Nikkei up almost 3 per cent, South Korea up 3.4 per cent and the MSCI Asia-Pacific index excluding Japan up 1.5 per cent.
Investor optimism got a further lift when Brent crude fell below $80 a barrel on prospects of progress towards reopening the Strait of Hormuz, easing global inflation fears and brightening the outlook for oil-importing nations such as India.
The dramatic fall in Brent crude and record highs in the US markets have laid the ground for a good performance by Indian stocks, says V K Vijayakumar, chief investment strategist at Geojit Investments.
“Brent crude falling below $80 and record closing in US markets bodes well for the Indian market today. Today, the market will focus on monetary policy. The central bank will almost certainly keep the rates in today’s policy since any rate rise now will harm the continued growing momentum in the economy. The market will pay more attention to the central bank’s position and its comments on dealing with the challenges that are arising. The positives are economic resilience in the economy, improved corporate profits growth and FIIs becoming buyers for the sixth day in a row from the market standpoint. “It appears the market is set up for an upside breakout,” he added.
