Indian markets struggled to sustain recent gains in today’s session as investors remained cautious ahead of the RBI's monetary policy announcement.
Heavyweights such as Bharti Airtel, Reliance Industries, and ITC weighed on the indices with notable declines. However, the banking sector outperformed, driven by expectations of a potential CRR cut by the RBI. This optimism comes amid tight liquidity conditions in the banking system and concerns over economic growth, as GDP expansion slowed to a seven-quarter low of 5.4 percent in the July-September 2024 period.
Despite starting Wednesday's session on a positive note, the frontline indices struggled to sustain their momentum and briefly slipped into negative territory. However, strong buying interest in the banking sector provided crucial support, enabling the indices to recover and close with modest gains.
Nevertheless, Indian markets performed better in today’s trade compared to their peers. The Kospi Index fell 1.44 percent after political turmoil in South Korea, triggered by a brief imposition of martial law, rattled investors. Meanwhile, Hong Kong stocks edged lower following US technology sanctions and uncertainty over further stimulus measures from China.
The Nifty 50 ended the session with a marginal gain of 0.04 percent, settling at 24,467, while the Sensex rose 110 points, or 0.14 percent, to close at 80,956. In contrast, the broader market outperformed the frontline indices, with the Nifty Midcap 100 index climbing 1.05 percent to 58,112 and the Nifty Smallcap 100 index advancing 0.89 percent to 19,173 compared to the previous session's close.
Commenting on today's market performance, Vinod Nair of Geojit Financial Services said, "The domestic market maintained a positive trajectory, despite some volatility stemming from mixed sentiments in Asian markets due to the situation in South Korea. Broader indices showed strong performance, with the banking and financial sectors continuing to excel. Conversely, auto stocks were impacted by mixed November sales results."
He added, "The upcoming speech by the Fed chair could sway market sentiments, as recent Fed minutes have shown confidence in the easing of inflation. Although the effects of US policies under the new administration remain uncertain, the minutes suggest a probable continuation of the rate easing cycle."
Among sectoral indices, Nifty PSU Bank extended its winning streak for the second consecutive session, gaining 2.25 percent to reach a three-month high. The rally was fueled by expectations of supportive monetary policy from the RBI.
The RBI is anticipated to cut the Cash Reserve Ratio (CRR) to inject liquidity into the banking system and boost lending, a move expected to positively impact the profitability of financial firms. Other gainers included Nifty Realty, which rose 2.14 percent on similar expectations of supportive measures from the RBI, and Nifty Consumer Durables, which ended with a 0.77 percent gain.
On the losing side, Nifty Pharma emerged as the biggest laggard, declining 0.73 percent, followed by Nifty Energy and Nifty Auto, which dropped 0.73 percent and 0.71 percent, respectively.
Among the Nifty 50 constituents, 28 stocks closed in the red, with Bharti Airtel emerging as the top loser, declining by 2.3 percent. Cipla, Bajaj Auto, Tata Motors, Adani Ports & SEZ, Power Grid Corporation, and seven other stocks also ended the session with losses exceeding 1 percent.
On the winning side, HDFC Life Insurance and HDFC Bank led the gains, rising 2.6 percent and 1.9 percent, respectively. Other notable gainers included Apollo Hospitals, NTPC, Bajaj Finserv, TCS, Bajaj Finance, and Titan Company, each registering gains between 1 percent and 1.5 percent.
Rupak Deof LKP said, “The Nifty remained choppy throughout the day as investors exercised caution ahead of the RBI's monetary policy announcement. However, the index managed to close above the crucial level of 24,420.”
He added: “On the downside, support is placed at 24,350, while on the upside, it could move toward 24,700, where it may encounter initial selling pressure. A decisive move above 24,700 could trigger a continuation of its upward momentum. Conversely, a fall below 24,350 could weaken market sentiment.”
(By arrangement with livemint.com)