Indian markets opened weak on caution ahead of the RBI’s monetary and credit policy due later today. BSE Sensex was trading down 0.05% at 28,319.86 points, while NSE Nifty was flat at 8,768.05 points, after falling yesterday on profit booking.
Several analysts expect the Reserve Bank of India to cut key policy rates by 25 basis points to 6% today in order to spur an economy recovering from the impact of demonetisation.
India’s falling inflation and a fiscally prudent budget gives the RBI’s Monetary Policy Committee enough room to cut rates sooner to give a boost to the economy.
Consumer price inflation slowed to a two-year low of 3.41% in December. This was below the RBI’s target of limiting the inflation to 5% by March-end and to 4% in the medium term.
The government, for its part, chose to walk the path of fiscal consolidation, as Finance Minister Arun Jaitley capped the fiscal deficit target for the next fiscal year at 3.2% of GDP, well below the 3.3%-3.5% predicted by the analysts.
ITC Ltd and Infosys were among the top five losers in the early morning trade. Yesterday, the government sold 2% of its equity stake held in the tobacco major ITC through SUUTI to LIC for Rs 6,700 crore. On the other hand, CNBC TV18 reported that the founders of Infosys, India’s second largest information technology services firm, have raised concerns over the company’s governance with the board, including the quantum of salary hike given to the CEO Vishal Sikka and the size of the severance packages given to two former executives.
Earlier yesterday, Infosys had climbed over 1% on news that it is considering a large share buyback worth about Rs 12,000 crore to return part of its huge idle cash to its shareholders.
Axis Bank, Aurobindo Pharma and Axis Bank were among the other top losers on the indices this morning.
Earlier, global markets gave mixed cues with Asian markets trading down, European markets trading mixed and most US shares trading up.