Markets trade lower in morning deals; RBI keeps repo rate unchanged at 6.5%

Indian equity benchmarks were trading lower in morning deals after the Reserve Bank of India (RBI) kept key interest rates unchanged due to ‘high inflation’. The central bank has maintained the key policy repo rate at 6.5 per cent. This is for the 11th consecutive time that the RBI has kept the repo rate unchanged. The RBI has maintained the repo rate at 6.5 per cent since February 2023. Besides, the RBI has cut real Gross Domestic Product (GDP) growth forecast for FY25 to 6.6% from 7.2% earlier. Also, it has revised the CPI inflation forecast for FY25 to 4.8% from 4.5% earlier. Some concern also came as India Ratings and Research’s report stated that 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. Sector-wise, food processing stocks remained in watch as Minister of State for Food Processing Industries Ravneet Singh Bittu stated that the food processing sector received foreign direct investment (FDI) of $368.37 million till September of the current fiscal year. In FY24, FDI in food processing was $608.31 million. On the global front, Asian markets are trading mixed as traders are reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

The BSE Sensex is currently trading at 81607.74, down by 158.12 points or 0.19% after trading in a range of 81529.33 and 81925.91. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.08%, while Small cap index was up by 0.06%.

The top gaining sectoral indices on the BSE were Utilities up by 0.60%, Oil & Gas up by 0.59%, Telecom up by 0.55%, Consumer Durables up by 0.52% and FMCG up by 0.36%, while Realty down by 0.79%, Bankex down by 0.44%, Healthcare down by 0.25%, TECK down by 0.12% and Capital Goods down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.11%, Power Grid Corporation up by 0.72%, Larsen & Toubro up by 0.50%, HCL Technologies up by 0.43% and Titan Company up by 0.37%. On the flip side, Indusind Bank down by 0.79%, Tata Motors down by 0.76%, HDFC Bank down by 0.72%, Bajaj Finance down by 0.59% and TCS down by 0.54% were the top losers.

Meanwhile, V Anantha Nageswaran, the Chief Economic Advisor (CEA) of India has expressed confidence in the growth of the Indian economy. The CEA stated ‘If you run through the checklist for Indian economy, the health is pretty robust. Whether it is external debt as the share of GDP, whether it is the non-performing assets in the banking system and then coming to the bottom left, the overall inflation rate If you look at the first seven months of the year in the last several years overall headline Inflation is well-behaved.’

Further, He said that there are some specific food items that are contributing to the sharp rise in inflation but it is confined to a very small percentage of the overall consumer price index basket of goods and services. Besides, talking about the fiscal balance and capital expenditure Nageswaran said it has improved over the last seven years. He said ‘The orientation of fiscal expenditure in the last seven years or so has improved towards more of Capital expenditure and less of revenue expenditure as a proportion.’

On concerns of slowing down of the economy, he said erratic monsoon and excessive rainfall did hamper some economic activity in the second quarter. For context, India’s GDP growth has disappointed expectations, with the economy growing by just 5.4 per cent in the July-September quarter of FY2024-25, significantly below the Reserve Bank of India’s (RBI) forecast of 7 per cent.

The CNX Nifty is currently trading at 24628.40, down by 80.00 points or 0.32% after trading in a range of 24620.50 and 24751.05. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 1.69%, BPCL up by 1.18%, ITC up by 1.14%, Eicher Motors up by 0.56% and Power Grid Corporation up by 0.53%. On the flip side, Cipla down by 0.98%, Bajaj Finance down by 0.95%, HDFC Bank down by 0.89%, Indusind Bank down by 0.87% and Tata Motors down by 0.77% were the top losers.

Asian markets are trading mixed; Nikkei 225 slipped 381.43 points or 0.97% to 39,014.17, Taiwan Weighted lost 84.51 points or 0.36% to 23,183.43, Straits Times fell 13.32 points or 0.35% to 3,809.36 and KOSPI dropped 15.20 points or 0.62% to 2,426.65.

On the flip side, Hang Seng advanced 270.93 points or 1.37% to 19,831.37, Jakarta Composite gained 26.21 points or 0.36% to 7,339.52 and Shanghai Composite strengthened 41.5 points or 1.22% to 3,410.36.