Indian stock markets ended lower on Tuesday in a dull trade ahead of the outcome of RBI’s bi-monthly policy meeting which is due for later tomorrow. BSE Sensex dropped 0.20% or 67.28 points to end at 32,802.44 whereas NSE Nifty shed 9.5 points or 0.09% to finish at 10,118.25. The resolution Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel will be made public on December 6. The central bank had reduced the benchmark lending rate by 0.25% points to 6% in August, bringing it to a 6-year low, however, kept it unchanged in October. Shares of Hero MotoCorp, Wipro, Tata Steel, NTPC, Dr Reddy’s and ONGC were the major laggards today while a support from biggies like SBI, Airtel and RIL helped to trim the losses.
Shares of SBI, Bharti Airtel, Reliance Industries, Sun Pharma, ICICI Bank, Kotak Mahindra Bank and HDFC gained up to 1.92% on BSE Sensex. HDFC Bank, L&T, Hero MotoCorp contributed the most to the Sensex decline with on the other hand Reliance Industries and SBI helped the index to offset partial losses. Within minutes of trading, the 30-share barometer Sensex washed off as much as 187.2 points to hit the day’s low of 32,682.52 while the broader Nifty dropped 58.65 points to mark the day’s low at 10,069.1 in the morning session.
Recently last week, India’s GDP growth has shown signs of recovery last week at 6.3% but it will not have any bearing on the Reserve Bank of India’s monetary policy decision tomorrow. Analysts say higher inflation, which may even breach its 4% target in the next few months, higher oil prices and the impact of the seventh pay commission would make the central bank to keep the repo rate on hold for the second time, and for the third time in February too.
The DBS group expects the RBI to leave policy rates unchanged following this Wednesday’s MPC meeting. “Our focus will be on the tone of the policy guidance, divided between a neutral or a hawkish bias,” the DBS group said in a note. DBS expects guidance to sound cautious but not outright hawkish. “Markets are currently pricing in 2-3 rate hikes in the year ahead; we, however, don’t believe rate hikes are likely in this timeframe, given our benign inflation forecast,” it added.
Among the regional markets, Japanese Nikkei 225 index slipped 0.4% to 22,622.38 and Hong Kong’s Hang Seng index dropped 0.5% to 28.977.54, South Korean Kospi gained 0.2% to 2,507.44, while the Shanghai Composite index shed 0.2% to 3,303.05. The Dow Jones Industrial Average reached a record high on Monday, with banks and retailers surging and technology companies falling as investors realigned their portfolios in hopes of benefiting from expected corporate tax cuts, Reuters reported. The Dow Jones Industrial Average rose 0.24% to end at 24,290.05 points, while the S&P 500 lost 0.11% to 2,639.44. Earlier in the session, the S&P 500 had touched a record high. The Nasdaq Composite dropped 72.22 points to end at 6,775.37.