Nifty, Sensex sees sharp slide after RBI credit policy

• PSU stocks like Power Grid, SBI, BPCL were amongst the top gainers on Nifty.
• FMCG companies like Britannia, Tata Consumer and Nestle were among the top losers.
• RBI increased GDP growth projections for FY24 and FY25, keeping rates and stance unchanged.
  

Indian stock markets which opened in the green in the morning trade, fell sharply after the central bank’s rate setting committee decided to keep repo rates unchanged and remain focussed on ‘withdrawal of accommodation’.

While most experts had expected status quo on rates, a few have been hoping for a change in RBI’s stance to ‘neutral’. As of 11:30 am, Sensex was 649 points down to 71,524; and Nifty fell by 192 points to 21,737.

Almost all sectoral indices are trading in the red, with the exception of Nifty PSU which was up 2.29% and Nifty Media which is up 1.64%. Nifty Oil and Gas was up marginally by 0.26%. Amongst the broader market indices, midcap indices like Nifty Midcap Select and Nifty Midcap 100 etc are trading in the green.

PSU stocks like Power Grid, SBI, BPCL were amongst the top gainers on Nifty, along with Hindalco and TCS. FMCG companies like Britannia, Tata Consumer and Nestle were among the top losers, along with others like Axis Bank and Eicher Motors.

The RBI also increased FY24 GDP projections to 7.3% from 7%. He also set FY25’s GDP growth projection at 7%, and FY25’s CPI inflation is seen at 4.5%. RBI governor Shaktikanta Das also said that the 250 basis point rate hikes are still working their way through the system.

"The focus on the necessity of inflation to settle closer to 4% remains intact suggesting RBI continues to remain cautious on inflation. The change in stance could follow towards the end of 1QFY25 and subsequently shallow rate cuts starting in 2HFY25," said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

Most market experts believe that the stock markets will continue to remain focussed on profit taking. “Markets are expected to log gains in early trades Thursday as investors would take cues from overnight gains in US indices. Bargain hunting and value buying could be seen as investors would be selective after the record rally in recent months,” said Prashanth Tapse, senior VP of research at Mehta Equities.

The US markets ticked up on Wednesday after markets absorbed the fourth-quarter earnings of large companies like Disney, Ford, Uber, and Roblox. All the three three benchmark indexes closed in the green.

"The mother market US is setting new records and this provides the support to facilitate new records in India, too. The bulls are again on the front foot and will use any positive news to push the market forward. Even while enjoying this bull run in the market, investors should keep in mind the fact that market valuations are high and partial profit booking and moving some money to fixed income would be a safe strategy,” said Dr V K Vijayakumar, chief investment strategist at Geojit Financial Services.