Indices rise for 4th day, Nifty above 18700; RBI policy in focus

The domestic equity indices have been on a roll, with Wednesday marking the fourth consecutive trading session of gains. Despite a slow start for the Nifty, it eventually broke out above the 18,700 levels, further adding to the excitement. Realty, metals and FMCG shares outperformed while banks and pharma stocks lagged.

All eyes are now on the RBI`s credit policy announcement on Thursday, as it may provide valuable insights into the direction of interest rates. Investors are hopeful that the improving domestic macroeconomic situation may lead to a pause in rate hikes.

The barometer index, the S&P BSE Sensex advanced 350.08 points or 0.56% to 63,142.96. The Nifty 50 index gained 127.40 points or 0.68% to 18,726.40. In four consecutive sessions, the Sensex advanced 1.14% while the Nifty climbed 1.29%.

Nestle India (up 2.97%), Larsen & Toubro (up 1.66%) and Reliance Industries (up 0.70%) boosted the Nifty higher today.

The broader market outperformed the headline indices. The S&P BSE Mid-Cap index rose 1.09% while the S&P BSE Small-Cap index advanced 1.15%.

The market breadth was strong. On the BSE, 2,295 shares rose and 1,267 shares fell. A total of 136 shares were unchanged.

The three-day meeting of the Monetary Policy Committee of the Reserve Bank of India (RBI) began on Tuesday, 6 June 2023. The MPC decision will be announced by RBI Governor Shaktikanta Das on the last day of the meeting, which is Thursday, 8 June 2023.

Economy:

As per the World Bank report, India is set to maintain its position as the fastest-growing economy among the largest EMDEs, in terms of both aggregate and per capita GDP. However, the report also suggests that growth in India is expected to slow down further to 6.3% in FY2023/24 (April-March), which is a 0.3% point downward revision from January. This slowdown is attributed to high inflation and rising borrowing costs, which are constraining private consumption, while fiscal consolidation is impacting government consumption. Nevertheless, growth is projected to pick up slightly through FY2025/26, as inflation moves back toward the midpoint of the tolerance range and reforms start to pay off.

Numbers to track:

The yield on India`s 10-year benchmark federal paper rose 0.09% to 6.983 from previous close of 6.977.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 82.54, compared with its close of 82.60 during the previous trading session.

MCX Gold futures for 4 August 2023 settlement fell 0.13% to Rs 59,908.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was down 0.18% to 103.94.

The United States 10-year bond yield declined 0.44% to 3.687.

In the commodities market, Brent crude for August 2023 settlement added 71 cents or 0.93% to $77 a barrel.

Global Markets:

European markets declined on Wednesday, while Asian stocks traded mixed. Investors are awaiting key economic data, including inflation data from the United States and the Federal Reserve`s policy meeting next week.

China`s exports in May 2023 declined 7.5% year-on-year, sharply lower than the 0.4% fall expected. Imports saw a smaller fall of 4.5% year-on-year. The country`s trade surplus in May was $65.81 billion, down 16.1%.

Australia`s first quarter gross domestic product expanded by 2.3% year-on-year. This was the slowest rate of growth in 18 months since the country emerged from a Covid-19 lockdown in September 2021.

Stocks in Spotlight:

Torrent Power surged 13.70%. The company said that it has signed a Memorandum of Understanding (MoU) with the Government of Maharashtra for development of three Pumped Storage Hydro Projects of 5,700 MW capacity in Maharashtra.

Va Tech Wabag gained 2.16%. The water treatment company has secured a contract worth approximately Rs 420 crore for the construction, operation, and design of a water treatment plant (WTP) in Jite, Raigad. The WTP will have a capacity of 270 million litres per day (MLD) and will cater to the future water demand of Navi Mumbai.

Engineers India (EIL) advanced 2.77% after the company bagged service supply contracts from National Aluminium Company (NALCO) and Jindal Steel and Power Limited (JSPL) worth Rs 20.55 crore.

G R Infraprojects rose 1.95% after the company`s wholly owned subsidiary, GR Hasapur Badadal Highway, executed concession agreement with National Highways Authority of India (NHAI) for Rs 872.17 crore on 6 June 2023.

KPI Green Energy rose 1.95% after the company has received letter of intent (LoI) from Anupam Rasayan India to execute wind-solar hybrid power project under captive power producer (CPP). The aggregate LoI size is 40 MW capacity (comprising of 21.50 MW Wind and 18.50 MW Solar). The project is scheduled to be completed in the financial year 2023-24 in various tranches.

JSW Ispat Special Product rallied 2.75%. Kiran Menon, chief financial officer (CFO) of JSW Ispat Special Product, has resigned from his position, effective from close of business hours of 5 June 2023. Menon cited his resignation to pursue opportunities outside the Group.

Nelco declined 0.95% after the company announced a strategic investment in Piscis Networks (Piscis) to enhance its portfolio of satellite communication solutions.

Deepak Fertilisers and Petrochemicals Corporation fell 0.11%. Performance Chemiserve (Issuer) a wholly owned subsidiary of the company has raised Rs 900 crore by issue and allotment of rated, listed, unsecured, redeemable non-convertible debentures (NCDs) on private placement basis to qualified institutional buyers.

IPO Update:

The initial public offer (IPO) of IKIO Lighting received bids for 10.40 crore shares as against 1.52 crore shares on offer, according to stock exchange data at 17:00 IST on Wednesday (7 June 2023). The issue was subscribed 6.83 times.

The issue opened for bidding on Tuesday (6 June 2023) and it will close on Thursday (8 June 2023). The price band of the IPO is fixed at Rs 270-285 per share. An investor can bid for a minimum of 52 equity shares and in multiples thereof.

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