Ahead of the monetary policy review by the Reserve Bank of India on Tuesday, domestic markets traded flat as the markets apprehensively wait for a rate cut announcement by the RBI.
While the benchmark Sensex at the Bombay Stock Exchange was up by only 20 points or 0.07 per cent and closed at 27,849, the broader Nifty at the National Stock Exchange was down 0.25 points.
As the talks of rate cut have gained momentum over the last couple of weeks, the markets have been anxiously waiting for a rate cut from the RBI. In the last 10 sessions, the Sensex has risen by only 161 points or 0.58 per cent despite strong Q4 GDP growth numbers, inflation figures remaining within RBI’s comfort zone.
Experts point that a rate cut is needed now to push investments and growth.
“At a time when the inflation is low and the growth is slow, it is ideal to cut rates. The corporate profitability and investment cycle has not recovered. The RBI can even go for a 50 basis point rate cut,” said an individual close to the regulatory body.
He further point that if the RBI does not go for a rate cut and gives an argument against rate cut then it will be a big dampener.
FII activity too has slowed over the past fortnight and the FIIs have been staying put with their investment. There has been no major inflow or outflow of funds from the Indian markets. On Monday, the net FII inflow into the Indian equities stood at Rs 170 crore. In fact, over the last 10 trading session the net FII inflow into the equity and debt markets amounted to only Rs 231 crore and Rs 512 crore, respectively.
Market experts ,too, point that the markets are anxiously waiting for the RBI’s monetary policy review. “A cut of 25bps is the most likely consensus. A cut with dovish outlook will provide further support to the market. The immediate momentum of the market will depend on tomorrows event outlook, equity market has high expectation from the event, a cut with hawkish view will not be welcomed by the market,” said Vinod Nair, head of research, Geojit BNP Paribas Financial Services.
Among BSE sectoral indices, consumer durable surged by 1.97 per cent, followed by realty 1.61 per cent, consumer goods 1.04 per cent, oil & gas 0.69 per cent and power 0.38 per cent, while healthcare stocks tanked 2.81 per cent.
Of the 30-share Sensex pack, 16 ended higher and 13 finished lower, while SBI ended unchanged. Major index gainers were L&T 3.03 per cent, Reliance 2.76 per cent, HUL 2.31 per cent, Maruti 2.24 per cent, Cipla 1.81 per cent, Tata Power 1.81 per cent, ITC 1.61 per cent, NTPC 1.43 per cent, Infosys 1.15 per cent and BHEL 0.93 per cent.
On the flip side, Sun Pharma plunged by 8.99 per cent, followed by Bharti Airtel 2.12 per cent, Tata Motors 1.96 per cent, ONGC 1.79 per cent and HDFC Bank 1.4 per cent.