Sensex, Nifty trade flat with positive bias; All eyes on RBI meeting outcome

Indian equity benchmarks made flat-to-positive start on Friday amid foreign fund inflows. Foreign institutional investors (FIIs) bought equities of Rs 8,539.91 crore on December 5. Soon, markets turned volatile and are struggling for direction ahead of the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) decision on the key interest rate. This meeting holds more significance amid major economic challenges, including lower than expected Q2 GDP growth, CPI inflation surging to a 14-month high in October, and declining production levels. There are expectations that the central bank might go for a reduction in Cash Reserve Ratio (CRR) for banks instead of cutting the policy repo rate. 

At this point of trade, Sensex and Nifty are trading flat with positive bias. Some support came as V Anantha Nageswaran, the Chief Economic Advisor (CEA) of India expressed confidence in the growth of the Indian economy, and said that the Indian economy is in good health. However, upside remained capped as India Ratings and Research in the report said the current account deficit (CAD) for the September quarter is set to widen to 1.6 per cent, the most in the last seven quarters. 

Global cues also remained lackluster with Asian markets trading mixed, following the broadly negative cues from Wall Street overnight, as traders remain cautious and are reluctant to make significant moves ahead of the release of the closely watched monthly US jobs data later in the day that will offer clues on the US Fed's interest rate moves. Back home, IT stocks are in focus with report that margins for some Indian IT companies are likely to decline in the third quarter of FY25 due to seasonal and structural factors. In stock specific development, Canara Bank rose after it received RBI approval for the divestment of its stake in Canara Robeco Asset Management Co.

The BSE Sensex is currently trading at 81811.83, up by 45.97 points or 0.06% after trading in a range of 81690.70 and 81905.03. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.14%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Utilities up by 0.95%, Telecom up by 0.89%, Oil & Gas up by 0.77%, Power up by 0.63% and PSU up by 0.57%, while Realty down by 0.42%, Capital Goods down by 0.10%, Healthcare down by 0.07%, IT down by 0.01% and TECK down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.14%, Power Grid up by 1.03%, Mahindra & Mahindra up by 0.69%, HCL Technologies up by 0.51% and ICICI Bank up by 0.49%. On the flip side, Tata Motors down by 0.66%, TCS down by 0.62%, HDFC Bank down by 0.41%, Ultratech Cement down by 0.38% and Indusind Bank down by 0.37% were the top losers.

Meanwhile, India Ratings and Research in the report said that the current account deficit (CAD) for the September quarter is set to widen to 1.6 per cent of GDP - the most in the last seven quarters. In absolute terms the July-September CAD will be $15 billion, or 1.6 per cent, as against $9.8 billion, or 1.1 per cent, in the June quarter.

The CAD in the second quarter will be the highest since Q3 FY23, where the crucial gap representing the country's external position was $16.8 billion, or 2 per cent of the GDP. The agency said merchandise exports shrank 3.9 per cent during the period while goods exports were down to a 12-quarter low of $103 billion.

It added goods exports declined after three quarters due to subdued demand from major exporting partners such as China, Singapore, Bangladesh, and Australia. It further said the CAD is moderate to about 1.3 per cent of the GDP in December quarter.

The CNX Nifty is currently trading at 24722.95, up by 14.55 points or 0.06% after trading in a range of 24682.95 and 24742.90. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.52%, BPCL up by 1.55%, Eicher Motors up by 1.45%, ITC up by 1.37% and Power Grid up by 0.85%. On the flip side, Cipla down by 0.70%, TCS down by 0.70%, Tata Motors down by 0.61%, Ultratech Cement down by 0.60% and Indusind Bank down by 0.45% were the top losers.

Asian markets are trading mixed; Nikkei 225 slipped 419.03 points or 1.06% to 38,976.57, KOSPI dropped 23.60 points or 0.97% to 2,418.25, Straits Times fell 13.54 points or 0.35% to 3,809.14 and Taiwan Weighted lost 3.66 points or 0.02% to 23,264.28. On other hand, Hang Seng advanced 270.78 points or 1.38% to 19,831.22, Shanghai Composite strengthened 41.5 points or 1.22% to 3,410.36 and Jakarta Composite was up by 4.15 points or 0.06% to 7,317.46.