Mid-day Mood | Markets cautious as RBI in no hurry to trim rates; realty stocks lead

Benchmark indices the Sensex and the Nifty continued to trade in the red on April 5 afternoon after the Reserve Bank of India (RBI) didn’t offer any cues on rate cuts, while holding rates steady at 6.5 percent for the seventh consecutive time.

The RBI's cautious stance could keep markets rangebound in the near-term said analysts but remained positive amid surplus liquidity talk and a strong growth outlook.

"This is a balanced outcome for the equity market," said Gaurav Dua, senior vice-president & head–Capital Market Strategy, Sharekhan by BNP Paribas.

He remains positive on markets in the near-to-medium term, with real estate, banks, consumer and engineering or capital goods as the preferred sectors.

Around noon, the Sensex was down 30.02 points, or 0.04 percent, at 74,197.61, and the Nifty was down 15 points, or 0.07 percent, at 22,499.70. The market breadth was in the favour of gainers, as around 2,050 shares advanced, 1,227 declined and 94 unchanged.

Broader markets outperformed the benchmarks, as Nifty midcap 100 and smallcap 100 indices gained up to 0.7 percent. Fear gauge the India VIX jumped more than 3 percent to trade around 11.6.

RBI doesn’t seem to be in a hurry to cut interest rates before the US Federal Reserve, which could weigh on investor sentiment, analysts said.

"The market is concerned about a potential delay in the rate cut, which could cause it to remain range-bound in the near term," said Deepak Ramaraju, Senior Fund Manager, Shriram AMC.

Sectoral trend

Among sectors, Nifty Realty index was the top performer as it surged over 1 percent on April 5 noon after the RBI kept policy rates unchanged at 6.5 percent. Analysts believe that RBI's decision extends favourable conditions for potential homebuyers, contributing to resilience and vitality in the real estate sector.

"Consistent home loan rates enhance consumer confidence, underpinning investment decisions and fostering an environment conducive to sustained development," said Dharmendra Raichura, VP & Head of Finance at Ashar Group.

On the flipside, Nifty Auto and Nifty IT were the top sectoral laggards as they slipped up to 0.5 percent.

Technical view

Sameet Chavan, Head Research, Technical and Derivative - Angel One believes that the sustainability of bullish trend is the primary concern, and the participation of broader markets is highly considered.

"From a technical point of view, the closure around the pivotal zone 22,500 and a follow up buy is anticipated to trigger fresh leg of rally. On an immediate basis, 200-300 points of the rally could be seen if the global peers show no hindrance. On the downside, 22,350-22300 has already proved its mettle and is expected to act in the same manner," he added.

Small finance bank stocks: They rose up to 2.5 percent on April 5 as the Reserve Bank of India (RBI) Governor Shaktikanta Das announved that the central bank as allowed small finance banks to use rupee derivative product to hedge interest risks.

Aavas Financiers: The stock surged as much as 8 percent intraday on April 5 after the company reported strong growth in disbursements and assets under management for the quarter ended March. The non-bank finance company reported a 20 percent on year uptick in disbursements to Rs 1,890 crore during the January-March quarter

Kalyan Jewellers: The stock rose as much as 3 percent in opening trade on April 5 after the company reported strong revenue growth in the January-March quarter. The jewellery maker posted a 34 percent year-on-year growth in its consolidated revenue for Q3, driven by strong footfalls ahead of the wedding season

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