Markets steady ahead of RBI policy, F-;O expiry; Sensex near 58,500, Nifty 50 over 17,460; Hero MotoCorp, M-;M, Hindalco in focus; Power Grid, Tata Steel top bulls

10 Feb 2022 , 09:43 AM

Indian markets traded steadily on Thursday’s opening bell ahead of RBI’s bi-monthly monetary policy set to be announced later today. Also, the performance is on the day of the weekly F&O expiry. Investors were upbeat in Power Grid and Tata Power stocks after their Q3 earnings, while they wait for the quarterly financial performance of Hero MotoCorp, Mahindra & Mahindra and Hindalco Industries.

The domestic equities tracked Asian cues that witnessed a broad-based marginal upside with exceptions of Hong Kong and Chinese shares as key focus shifts on US inflation data which is expected to give more clarity on monetary policy tightening.

At around 09.41 am, Sensex was trading at 58,485.99 up by 20.02 points or 0.03%. The index has touched an intraday high and low of 58,810.53 and 58,430.77.

Nifty 50 performed at 17,469.60 up by 5.80 points or 0.03%. The index has clocked an intraday high and low of 17,554.10 and 17,454.60 respectively.

In broader markets, BSE SmallCap and Sensex Next 50 underperformed tumbling by over 100 points or 165 points.

Consumer durables stocks outperformed their counterparts, while banking and capital goods were the worst hit. Pharma and FMCG stocks also slipped. Overall, the markets had a lacklustre demand as they were cautious ahead of RBI policy outcomes. Today, expect some volatility as RBI could hike reverse repo rates.

Top bulls on Sensex were – Power Grid (+3%), Tata Steel (+1%) followed by Infosys, NTPC, HDFC Bank and Axis Bank.

Top bears on Sensex were – Asian Paint, Maruti Suzuki, Bajaj Finserv, M&M, Bharti Airtel, HUL, Titan, ITC and Bajaj Finance down between 0.5-1.5%.

The six-member monetary policy committee (MPC) has already commenced a three-day monetary policy meeting starting February 8 and the outcome will be presented today. The majority are expecting yet another ‘status quo’ in accommodative policy stance as well as policy interest rates. However, the reverse repo rate is likely to see some major changes, while the GDP growth outlook for FY22 may witness a downward revision. A rate hike scenario in policy repo rate is expected to be at a slower pace.

Currently, RBI’s policy repo rate under the liquidity adjustment facility (LAF) is unchanged at 4%. While the reverse repo rate under the LAF remains unchanged at 3.35% and the marginal standing facility (MSF) rate and the Bank Rate at 4.25%.

Markets sentiments will be influenced by RBI’s policy stance, inflation and economic outlook, governor Shaktikanta Das’ speech and other new initiatives in policies.

On the global front, most Asian markets consolidate the new trend of higher rates and growth going alongside. Taiwan and South Korean markets traded mixed as the growth outlook for select auto saw profit booking. Chinese stocks will be in focus as data for consumption sees a pre-Covid rise which bodes well for the local markets.

Overnight, on Wall Street,  US markets see the third day of a superb comeback as Dow Jones gains another 300 points while Nasdaq leads the gainers with nearly 2% gains of over 290 points. Bond yields close lower @ 1.92% while the US$ index eases further to 95.49 with oil prices falling for another day.