Share Market Highlights: Sensex ends more than 200 pts lower, Nifty settles below 18,600; hawkish RBI tone drags

Asian Paints, L&T, ICICI Bank, SBI, Ultratech Cement, Sun Pharma, Cipla and BPCL were the top gainers across the two frontline indices.

HCL Tech, Wipro, NTPC, TCS, Tech M, Kotak Bank were the top Sensex laggards, down up to 0.7%, while ONGC was the top Nifty loser.

BSE Sensex fell over 200 points to close at 62,410 and NSE Nifty 50 index settled at 18,560.

“The RBI's decision to hike the repo rate by 35 bps is on the much-expected lines with the primary goal of keeping inflation in check. Although this will lead to a marginal rise in lending rates, it may not be of much deterrence for the real estate industry backed by the positive sentiments of homebuyers and strong demand influenced due to the price rise of Indian real estate in the days to come. The current stance on the repo rate will have lower impact on the mortgage rate, as the pace of hike has been moderated and hence perceived positively by the home buyer.”

– Nitin Bavisi, Group CFO, Ajmera Realty & Infra India

“As expected, the Monetary Policy Committee increased the policy rate by 35 bps with a majority decision of five out of six members voting for it, and more importantly, re-iterated its intention of withdrawing accommodative policies. The RBI governor exhibited confidence in India's growth trajectory but mentioned that it is crucial to be vigilant to the secondary effects of high global commodities, especially energy and food prices. We believe the MPC decisions today are on expected lines and would not have any major impact on Indian markets, purely based on decisions announced today.”

– Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS

“Expectations for RBI policy We expect crude to fall significantly from its recent high. If the government passes this on to consumers, we believe the RBI will pause in its next policy. We also believe that the market will remain neutral in the coming days and that it will set new highs in December.”

– Ravi Singhal, CEO, GCL

“The RBI’s approval to hedge gold at IFSC is a positive move and a major enabler for gold importers and exporters using yellow metal as the primary raw material for production. This will help increase the price competitiveness of the Indian jewellery industry. It will help players hedge their positions against price fluctuations and unfavorable currency movement. This will also lead to an increase in volumes and activities at IFSC.”

– Colin Shah, MD, Kama Jewelry

“RBI's monetary policy was on expected lines with a 35-bps hike and promised to do more. Their comments on Rupee were also in line with their previous comments. They target volatility and Rupee remains stable on a REER basis. In a way it means, RBI would be watching closely after volatility has increased in USDINR, over the past two trading sessions. But without active intervention or announcement of sell-buy swap, we could see USDINR move higher. We expect a range of 82.00 and 83.00.”

– Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities

“RBI maintained status quo in its stance of withdrawal of accommodation raising repo rate by 35 bps as expected to 6.25%. With no indication on any immediate target on terminal repo rate we expect GSec yields to stay elevated and liquidity to be managed effectively by RBI as need arises using various instruments.”

– Prashant Pimple Chief Investment Officer – Fixed Income, Baroda BNP Paribas Asset Management India

“It’s a welcome move by the RBI to permit hedging at the International Financial Services Centre. This will not only increase the participation on IFSC, but also provide as an effective and efficient tool to hedge in India avoiding offshore routes.”

– Navneet Damani, Sr. VP, Currency and Commodity, MOFSL

“RBI policy action was on expected lines and hence yields across the curve haven’t moved much. Apart from inflation trends, we believe that RBI will also be guided by USD-INR movement in determining further policy actions. There is hardly any term spread between the 10 yr yield and 3-5 year yields for both G-sec and AAA segments. Hence, for core fixed income portfolio allocation, we continue to maintain bias towards Target Maturity Funds which invest in the 3-5 year maturity bucket with underlying portfolio being a combination of G-sec, State Development Loans (SDLs), and AAA-rated instruments.”

– Nitin Shanbhag, Sr. Executive Group VP, Head – Investment Products, Motilal Oswal Private Wealth

“Availability of adequate liquidity for the productive sector of the economy has been assured by RBI which augurs well for the stock market, which is now seeing new major entrants and continued foreign inflow. The extension of time for 'Hold To Maturity' categorisation of fresh bank investments in bonds till March 2024, paves the way for stability in the bond market/financial sector and future government borrowing. Overall pragmatic revisions of the monetary policy by RBI considering the uncertainties and volatility both at domestic and international fronts.”

– Jyoti Prakash Gadia, Managing Director, Resurgent India

“Now as we have another 35-bps increase in repo rate the EMI’s are expected to go up further by another ~3-5%. As far as loan tenor increase is concerned, I don’t think there is much room for loan tenor increase beyond the 13 years already done till date, due to 190 bps previous increases.

Home loan borrowers who have had their home loan original interest rate at 10-11% and initial loan tenors above 25 years would have had no option but to increase their EMI because any attempt to increase their loan tenor would result in loan becoming negatively amortized. Meaning, the original EMI would not be sufficient to cover the monthly interest payable with the existing EMI thereby resulting in the loan principal increasing every month instead of reducing.

Most banks have fully passed on the repo rate increase of 190 bps to the consumers of home loans till date. This rate hike of 190 bps has resulted in a loan tenor increase of ~ 13 years for borrowers who had initially opted for 20 years loan period, assuming they had taken a home loan at 6% at the time of home purchase. Alternatively, those borrowers who opted for an EMI increase instead of a loan tenor increase have seen their EMI go up by ~20% already.”

– Shrikant Shrivastava, Chief Risk Officer, IMGC

“Nifty is witnessing some profit booking from the 18,888 level; however, the overall texture is still bullish, where 18,600–18,550 is an immediate demand zone and the 20-DMA around 18,440 is the next support level. On the upside, 18,735 is an immediate hurdle, and then 18,888 and 19,000 are the next resistance levels.

Bank Nifty is consolidating nicely above the 9-DMA, while the 20-DMA around 42700 is the next important support level. On the upside, 43,500 is an immediate hurdle; above this, we can expect fresh momentum towards 44,000.”

– Santosh Meena, Head of Research, Swastika Investmart

“The markets had a muted immediate reaction to the RBI announcement, with little movement on either side. Nifty and Banks stayed on an upward bias during the announcement with some volatility. We see banks staying strong with this announcement as the interest income gets stronger with the rate hike. There is concern about the export sector given the slowdown in the global economy and consumer sectors to remain robust as rural demand is seen increasing and inflation moderating. The consumer goods sector has remained most robust today as the governor acknowledged the strong domestic economy and high manufacturing PMI.”

– Sonam Srivastava, Founder, Wright Research

“The financial sector has historically been among the most sensitive to changes in interest rates. Typically, during a rising interest rate scenario, the banking sector passes on rate hikes through the floating rate loans while delaying the rate hikes for deposits, benefitting from spreads, and expanding margins. A change in stance to dovish going forward by RBI will lead to rally in the banking segment. Overall, economy seems to be in good shape and a peak rate of 6.7% is not an unusually high number for domestic markets, thus we don’t see any material impact on the stock market but second order consumption impact we will watching closely, especially on the consumption side.”

– Anil Rego, Founder, Fund Manager, Right Horizon

“RBI's monetary policy was on expected lines with 35-bps hike and promise to do more. Their comments on Rupee was also in line with their previous comments. They target volatility and Rupee remains stable on a REER basis. In a way it means, RBI would be watching closely after volatility has increased in USDINR, over the past two trading sessions. But without active intervention or annoucement of sell-buy swap, we could see USDINR move higher. We expect a range of 82.00 and 83.00.”

– Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives, Kotak Securities

As the RBI Governor concludes his address, the Nifty IT and Nifty Media indices are the biggest sectoral losers so far, down over 0.5% each. LTIMindtree, Persistent Systems and L&T Technology Systems drag the IT index, while Network18, PVR and Saregama fall the most in the Media index.

“Markets must wean away from liquidity surplus overhang, all money markets to function from 9:00 am to 5:00 pm”, says RBI Governor Shaktikanta Das.

“The RBI MPC raised repo rate by 35 basis points to 6.25% with 5-1 vote. The stance remained focused on withdrawal of accommodation. While this was ours as well market consensus, it seems like we may not be fully done with the rate hiking cycle. The inflation guard continues to remain. Key to now track FOMC outcome in the coming week. Expect bond markets to give up some gains and trade range bound as global growth concerns dominate.”

– Lakshmi Iyer, CEO – Investment Advisory, Kotak Investment Advisors

As the RBI has hiked the repo rate by 35 bps, taking it to 6.25%, Bank Nifty stocks are seen rising in trade today, while the index gains over 100 points. The top gainers are AU Bank, ICICI Bank, Punjab National Bank, Bandhan Bank, IDFC First Bank and SBI.

The most active stocks on the NSE Nifty are Excel (down 7.69%), Central Bank (up 7.21%), Suzlon (up 0.98%), UCO Bank (up 5.44%) and Yes Bank (up 0.29%).

NTPC (down 1.14%), Tata Motors (down 1.07%), ONGC (down 0.81%), Kotak Bank (down 0.80%) and HCL Tech (down 0.80%) are the biggest losers of the Nifty 50 index amid RBI Governor Shaktikanta Das' address.

BPCL (up 2.04%), L&T (up 1.54%), Hindustan Unilever (1.02%), Asian Paints (up 0.92%) and ICICI Bank (up 0.86%) are the top Nifty 50 gainers amid RBI Governor Shaktikanta Das' address.

RBI MPC revises FY23 GDP growth to 6.8% from 7%.

Real GDP growth pegged at 7.1% in and at 5.3% in Q2FY23 by RBI governor Shaktikanta Das.

RBI MPC raises the repo rate by 35 bps, raising the nation's repo rate to 6.25% with 5 out of 6 members voting for the hike.

Bank Nifty is up over 100 points at 43,250, as investors are optimistic about 25-35 bps hike in the repo rate. AU Bank (up 1.53%), ICICI Bank (up 0.97%), Punjab National Bank (up 0.81%) and IDFC First Bank (up 0.58%) are leading the gains.

The NSE Nifty Auto index falls almost 0.2% before the RBI MPC meet. Constituents Tata Motors (down 1.02%), Sonacoms (down 0.47%), M&M (down 0.42%) and Hero MotoCorp (down 0.33%) are the laggards of the index.

The Nifty PSU Bank index continues to rally, rising almost 6% over the past five days. The index is up 0.91% before the RBI MPC meet, demonstrating positive investor sentiment as traders expect higher interest rates. Central Bank (up 7.4%), Indian Overseas Bank (up 5.87%), UCO Bank (up 5.44%), Maharashtra Bank (up 2.99%) are leading the gains.