Gift Nifty Points to Flat to Weak Opening for Sensex, Nifty on Thursday

Mumbai, Oct 7: Gift Nifty suggests that Indian benchmark indices could open flat to slightly lower on Thursday. This comes after the RBI hiked interest rates for the first time in almost four years, while there is still no end in sight to the Iran war. 

The near-month contract stood at 22,569.00 at 4 pm IST on Wednesday, down 23 points, or 0.1 per cent, from its previous closing price of 22,592. This is about 34 points lower than the Nifty 50’s Wednesday close of 22,603.05. The market could therefore open in line with a slight bearish bias after the rally ended following two sessions of gains. 

The contract opened at 22,776.50 and moved between a high of 22,893.50 and a low of 22,529.50, a range of 364 points. It was around 207 points lower than its opening level at the last reading. The November contract stood at 22,713.50, up 27.50 points, or 0.12 per cent. 

RBI Increases Repo Rate to 5.50% and Shifts to Calibrated Tightening 

The RBI on Wednesday increased the benchmark repo rate by 25 bps to 5.50 per cent, marking its first rate hike in almost four years. It also moved from a neutral stance to calibrated tightening. All six members of the MPC voted in favour of the increase. 

Higher crude prices and below-average rainfall are adding to inflationary concerns. Governor Sanjay Malhotra mentioned that the inflation picture is “no longer benign”. Inflation stood at 4.82 per cent in August, marking the third consecutive month in which it remained above 4 per cent. 

The RBI increased its CPI inflation estimate for the year to 5.2 per cent from 5 per cent, while its core inflation estimate was raised to 4.4 per cent from 4.3 per cent. Higher crude prices due to the Iran war are one of the major factors behind the increase. Since India is dependent on imported oil, every rise in oil prices also affects the INR. 

The RBI raised its growth estimate for the current year by 40 bps to 7.1 per cent after GDP grew by 7.8 per cent in the April-June quarter. This growth should provide the RBI with room to take measures to bring down inflation. 

Asian Markets 

Asian equities were mostly lower on Wednesday. South Korea’s Kospi fell 1.98 per cent to 6,803.90. Singapore’s Straits Times was lower by 1.63 per cent at 5,608.44, while Malaysia’s index closed 1.32 per cent lower at 1,611.78. 

Japan’s Nikkei fell 0.92 per cent to 70,035.71. Hong Kong’s Hang Seng closed 0.62 per cent lower at 24,130.50. Australia’s ASX 200, New Zealand’s NZX 50 and Taiwan’s index were lower by 0.09 per cent, 0.12 per cent and 0.03 per cent, respectively. 

Thailand’s SET was the only gainer, rising 0.15 per cent to 1,584.63. China’s markets remained closed for the National Day holiday and will reopen on Oct 8. 

Oil Prices 

Oil prices were higher on Wednesday. Brent crude was trading around 1.3 per cent higher at about USD 102 a barrel, amid threats to US oil production due to the storm and attacks in Saudi Arabia. WTI crude was trading around USD 90.16, up 0.78 per cent in early trade. 

With the Strait of Hormuz remaining a key concern, oil prices continue to be an important factor to watch for India. 

Market Wrap-Up 

The Sensex and Nifty ended lower on Wednesday, snapping a two-session winning run, with the Sensex down 429.11 points, or 0.59 per cent, at 72,638.70 and the Nifty 50 down 173.05 points, or 0.76 per cent, at 22,603.05. Breadth was negative, with 1,928 shares advancing, 2,251 declining and 192 unchanged, while the Nifty Midcap index fell 0.6 per cent and the smallcap index gained 0.3 per cent.  

Titan Company (TITAN) was the biggest Nifty loser, down 3.8 per cent, followed by Adani Enterprises (ADANIENT), Hindalco Industries (HINDALCO), JSW Steel (JSWSTEEL) and Bharat Electronics (BEL), while Kotak Mahindra Bank (KOTAKBANK) led the gainers, followed by BSE (BSE), Bharti Airtel (BHARTIARTL), ICICI Bank (ICICIBANK) and Coal India (COALINDIA). Only the media and PSU Bank indices ended higher, while the Nifty Metal index fell 2.3 per cent, Realty 1.8 per cent, Auto 1.6 per cent and FMCG 0.9 per cent. The rupee weakened to a five-month low against the US dollar and bond yields rose after the RBI announcement. 

Sources

•  Gift Nifty data
• NSE
• BSE
• www.cnbc.com
• www.oilprice.com