The Indian stock market continued its rising streak for the second straight day, with benchmark indices trading in the green during early trade on Thursday. The bullish mood is largely due to increasing hopes for a third consecutive repo rate reduction by the Reserve Bank of India (RBI) as its Monetary Policy Committee (MPC) meeting continues.
The Nifty 50 index was trading at about 24,753.15, a gain of about 132.95 points or 0.54% over its last close. The S&P BSE Sensex also showed robust performance, trading at approximately 81,136, higher by about 137 points or 0.17%. This comes on the heels of a strong close on Wednesday, with the Nifty 50 ending 77 points up at 24,620 and the Sensex rising 260 points to close at 80,998.
Secondly, the three-day RBI MPC meeting, which started yesterday, is the biggest domestic event determining market sentiment. The upcoming new policy outcome, expected to be announced on Friday, June 6, is eagerly anticipated. With retail inflation having comfortably softened to 3.16% in April and expected Q4 FY25 GDP growth showing a strong 7.4% (implying a full-year GDP growth of 6.5%), there is a broad consensus and strong confidence among market participants and economists alike that the RBI would stay on course with its accommodative stance. Some reports, including the latest from SBI research, go so far as to call for a “jumbo” 50 bp. An additional cut in the repo rate (now at 6%) would further spur credit growth and jumpstart economic activity.
Buying interest was broad-based in early trade across sectors. The Nifty Pharma index was the biggest sectoral gainer, up nearly 1%, while the Nifty Realty index rose nearly 0.5%. PSU Banks and Auto sectors remained strong, extending their gains from yesterday. Among the individual stocks, Eternal, Dr. Reddy’s, Trent, Cipla, Adani Ports, Power Grid, Reliance Industries, Grasim, Adani Enterprises, Mahindra & Mahindra, UltraTech Cement, and Apollo Hospitals were among the top Nifty gainers. Bajaj Finserv, Trent, and Eicher Motors were the biggest losers from Wednesday’s close, with some follow-through pressure seen in select financials and consumer durable stocks still in today’s early trade.
The participation of the broader markets, represented by the Nifty Midcap and Nifty Smallcap indices, added to the positive momentum as well, up about 0.36% and 0.69%. This is a positive sign as it shows strong buying is present across all market capitalizations.
Also check:- Indian Equities Trade Higher as RBI Policy Meeting Kicks Off
On the market flows front, FPIs went back to selling after a brief foray into buying mode, as they were net sellers on Wednesday with an outflow of Rs 1,076 crore. Strong support came from Domestic Institutional Investors (DIIs), who stayed net buyers, pumping in Rs 2,567 crore. This DII buying has been instrumental in softening the market against relentless FPI selling in the last few sessions. The Indian Rupee was trading almost 0.6% lower against the US Dollar today.
Besides the key factor of the ongoing domestic optimism surrounding the RBI policy decision, global cues will be pivotal. Investors should be on alert for further shocks from US trade policy and developments in the ongoing geopolitical crisis. A few experts say the market will continue to stay in a consolidation phase in the immediate term, with the Nifty likely to move in the 24000-25000 band till the RBI gives its definitive forward guidance on three-day Friday. Since the only near-term market direction will be stock-specific, action will stay focused on named stocks, propelled by corporate game-changers and sector action.
