Sensex, Nifty Decline For Third Straight Session Ahead Of RBI Monetary Policy Decision

The Indian equity benchmarks fell for third session in a row on Thursday mirroring losses in global markets as sentiment was shaken after details from last month's meeting of Federal Reserve policymakers showed the central bank intends to be aggressive in its efforts to fight inflation. Meanwhile, investors shifted their focus to RBI's monetary policy decision due tomorrow amid rising inflationary pressure. The Sensex fell as much as 633 points and Nifty 50 index touched an intraday low of 17,623.

The Sensex fell 575 points or 0.97 per cent to close at 59,035 and Nifty 50 index dropped 168 points to settle at 17,640.

World shares were mixed Thursday after a retreat on Wall Street spurred by comments indicating the Federal Reserve intends to more aggressively tackle inflation.

Benchmarks rose in Paris and Frankfurt after declines in most Asian markets. U.S. futures fell while oil prices were higher.

The Fed comments have added to investor unease over the war in Ukraine, coronavirus outbreaks in China and persistent high inflation.

Minutes from the Fed’s meeting last month showed policymaker s agreed to begin cutting the Fed’s stockpile of Treasuries and mortgage-backed securities by about $95 billion a month, starting in May. That’s more than some investors expected and nearly double the pace the last time the Fed shrank its balance sheet.

Back home, investors lightened their positions ahead of Reserve Bank of India's monetary policy decision due tomorrow amid rising inflationary pressure owing to surge in fuel prices, analysts said.

However, experts believe that the MPC led by Governor Shaktikanta Das is widely expected to keep rates at record lows to spur economic growth.

"Considering domestic growth is still in the early stages, the Committee is likely to keep key policy rates unchanged in the upcoming monetary policy meeting. Even though the RBI is reiterating its commitment to supporting growth and easy liquidity, some revisions to inflation and growth forecasts can be expected. The overall growth rate has faced setbacks due to high commodity and input prices and chip shortages. Rising inflation, although transitory and imported, will weigh on the growth in the coming months. The rising input prices and increasing crude and global commodity prices do not hint toward a smooth path and will likely delay spending and hit business and consumer sentiment," said YS Chakravarti, MD & CEO, Shriram City Union Finance.

Reliance Industries, HDFC Bank, HDFC, Tata Consultancy Services, Infosys, Titan, Larsen & Toubro and ITC were among the top drags on the Sensex.

Selling pressure was broad-based as twelve of 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Oil & Gas index's over 2 per cent fall. Nifty Consumer Durables, Metal, Media, IT, Financial Services and Auto indices also fell between 0.7-1.7 per cent.

On the other hand, select pharma, healthcare and realty shares witnessed buying interest.

Mid- and small-cap shares also succumbed to selling pressure as Nifty Midcap 100 index declined 1 per cent and Nifty Smallcap 100 index fell 0.31 per cent.

Titan was among the top Nifty loser, the stock fell over 3 per cent to close at Rs 2,457 after the company in its quarterly update said that its jewellery division ended the volatile quarter on a flat note over a strong Q4 FY21 base (had a benefit of a large B2B order). Business saw subdued activity in top cities due to the Omicron wave in Jan'22, a very strong resurgence in Feb'22 and again a drop in customer purchases in Mar'22 on the back of sharp rise in gold prices and sentiment impact due to the external gee-political conflict.

Adani Ports, HDFC, ONGC, Tata Consultancy Services, HDFC Bank, Wipro, Power Grid, Reliance Industries, Bharti Aitrtel, Larsen & Toubro, Maruti Suzuki and Tata Motors also fell between 1.3-3.5 per cent.

On the flipside, Axis Bank, Divi's Labs, Hindustan Unilever, ICICI Bank, Dr Reddy's Labs, Tech Mahindra, Mahindra & Mahindra and Apollo Hospitals were among the gainers.

The overall market breadth was neutral as 1,712 shares ended lower while 1,700 ended higher on the BSE.