Domestic equity market got off to a good start on Tuesday, with the Sensex climbing 109 points and the Nifty posting modest gains in response to encouraging signals from other Asian markets.
Investor sentiment in Asia appeared to be improving even as the US market fell on Monday following the resurgence of concerns over the Federal Reserve’s interest rate trajectory in the wake of good jobs data last week.
The 30-share BSE Sensex increased by 108.97 points to 60,615.87 in early trade, while the larger NSE Nifty increased by 36.65 points to 17,801.25.
Reliance Industries, HDFC Bank, and TCS were among the Sensex stocks that were trading with gains.
According to statistics available with the BSE, foreign portfolio investors were net sellers on Monday, selling shares worth Rs 1,218.14 crore.
“The RBI MPC will view the recent inflation prints favorably. 3QFY23 CPI inflation at 6.1% is around 50 bps lower than RBI’s estimate and 4QFY23 inflation is also likely to be 20-30 bps lower than RBI’s estimate. We estimate inflation to average around 5.2% over the next 12-15 months. On the other hand, domestic growth remains on a decent footing for now while expectations of a global slowdown remain uncertain. The real repo rate would be positive by around 100 bps at the current level. Global rate hike cycles are close to peaking though the central banks remain cautious. While the MPC’s decision is finely balanced between pause and a 25 bps hike, we expect the MPC to hike by a last 25 bps to push the real rate comfortably into positive. This would help the RBI to be on a prolonged pause as it assesses the lagged impact of the past rate hikes and input price movements, the evolution of the global and domestic demand conditions, and behavior of global central banks,” said Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities .