Sensex, Nifty trade in fine-fettle on bargain hunting

Indian equity benchmarks made optimistic start on Monday following the broadly positive cues from Wall Street on Friday coupled with firm trade in Asian counterparts, as traders remain optimistic on an improved outlook for interest rates after data showing a slower than expected pace of acceleration in US consumer price inflation raised hopes for more interest rate cuts by the US Fed next year. Sensex and Nifty are trading in fine-fettle in early deals on account of bargain hunting after sell-off in the markets in previous few sessions. Some support came as India has made significant progress in technology and innovation, securing the 49th rank in the Network Readiness Index 2024 (NRI 2024), an improvement of 11 places compared to last year. This year, the country not only climbed the rankings but also improved its overall score to 53.63, reflecting its consistent efforts in advancing technology, research, and digital infrastructure. 

Besides, the 55th Goods and Services Tax (GST) Council meeting resulted in mixed decisions. The Council agreed to refer the proposal for a special levy for disasters to a Group of Ministers (GoM). Additionally, the Council clarified that no GST is payable on penal charges levied and collected by banks and non-banking financial companies (NBFCs) from borrowers for non-compliance with loan terms. On the sectoral front, Metal stocks are in focus as the Indian Steel Association has filed for a safeguard investigation and proposed a potential safeguard duty on imports of non-alloy and alloy steel flat products. In stock specific development, Coforge climbed as it completed acquisition of 54% stake in Cigniti Tech.

The BSE Sensex is currently trading at 78574.23, up by 532.64 points or 0.68% after trading in a range of 78438.67 and 78743.16. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.02%, while Small cap index was down by 0.64%.

The top gaining sectoral indices on the BSE were Realty up by 1.59%, Bankex up by 0.92%, Metal up by 0.83%, Oil & Gas up by 0.63% and Energy up by 0.62%, while Healthcare down by 0.43%, Industrials down by 0.21%, Consumer Durables down by 0.05% and Telecom down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 1.63%, ICICI Bank up by 1.31%, Bajaj Finance up by 1.26%, Tata Steel up by 1.17% and Bharti Airtel up by 1.08%. On the flip side, Zomato down by 2.41%, Sun Pharma down by 0.44%, NTPC down by 0.15%, TCS down by 0.15% and Titan Company down by 0.06% were the top losers.

Meanwhile, Monetary Policy Committee (MPC) Member Nagesh Kumar has said that the ongoing economic slowdown in the country has become serious enough to demand immediate policy attention. Advocating for 25 basis points (bps) cut in the repo rate during the December MPC meeting, Kumar highlighted the urgent need to address the dual challenges of declining growth and inflationary concerns. He said ‘The extent of the slowdown is serious enough to warrant policy attention’.

According to the minutes of the meeting released by the Reserve Bank of India (RBI), Kumar emphasized that economic conditions have worsened significantly since the October 2024 MPC meeting. He pointed to a steep decline in India’s economic growth. The GDP growth rate for Q2 of 2024-25 has dropped to 5.4 per cent, compared to 6.7 per cent in Q1 of the same fiscal year and 8.2 per cent in 2023-24. He noted that this decline is sharper than expected and has led to a broad-based downgrade in GDP growth forecasts for the year. In light of these developments, he argued that a 25 bps rate cut could help revive economic growth without exacerbating inflation. He added that inflationary pressures might ease with seasonal corrections in prices, creating space for supportive policy measures.

He stated ‘I believe that a rate cut would help in reviving economic growth without worsening the inflationary situation, which may soften with seasonal correction in prices. Hence, I will again vote for a 25-basis point cut in the repo rate while keeping a neutral stance’. Additionally, he recommended exploring non-rate measures to improve liquidity in the economy. He suggested a 50 bps cut in the Cash Reserve Ratio (CRR) as one of the measures to enhance liquidity and support economic recovery. The December MPC meeting minutes reflect growing concerns over the state of the economy, with two out of the 6 members voting for reducing the policy rates. While other four members including former RBI Governor Shaktikanta Das voted to keep the policy rates unchanged. The next meeting of the MPC is scheduled for February 5 to 7, 2025.

The CNX Nifty is currently trading at 23745.75, up by 158.25 points or 0.67% after trading in a range of 23701.60 and 23806.50. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Shriram Finance up by 2.12%, HDFC Bank up by 1.71%, JSW Steel up by 1.67%, Trent up by 1.37% and Tata Steel up by 1.19%. On the flip side, HDFC Life Insurance down by 1.37%, Cipla down by 0.67%, SBI Life Insurance down by 0.64%, Hero MotoCorp down by 0.61% and Sun Pharma down by 0.57% were the top losers.

All Asian markets are trading higher; Taiwan Weighted jumped 594.65 points or 2.57% to 23,104.90, Nikkei 225 surged 365.62 points or 0.94% to 39,067.52, Hang Seng advanced 137.28 points or 0.69% to 19,857.98, Jakarta Composite gained 78.14 points or 1.11% to 7,062.01, KOSPI increased 37.98 points or 1.56% to 2,442.13, Straits Times rose 34.69 points or 0.92% to 3,754.62 and Shanghai Composite was up by 6.92 points or 0.21% to 3,374.99.