RBI MPC meeting this week will be watched very closely as growth is coming back and so is inflation. RBI has been sucking out liquidity from the market which is being viewed as a precursor to a change in accommodative stance, said an analyst.
“Rising bond yields and multi-year high energy prices have stoked inflation fears globally at a time when supply chain disruptions are already putting pressure on economic activities. Inflation is clearly the key driver and an energy crisis and soaring oil prices are only going to further fuel that,” said Sageraj Bariya, Vice President – Institutional Sales, East India Securities.
How are bluechips doing
After opening in the red, benchmark indices pared some losses. At 9.20 am, BSE flagship Sensex was down 58 points or 0.09 per cent to 59,242. NSE benchmark Nifty declined 10 points or 0.06 per cent to 17,681.
“On technical front, key support levels for Nifty50 is 17,600 and can face good resistance at 17,815 level,” said Mohit Nigam, Head – PMS, Hem Securities.
In the 50-share pack Nifty, ONGC was the biggest gainer, up 3.90 per cent. Indian Oil, Maruti Suzuki, Adani Ports, UPL, Coal India, HUL, Bharat Petroleum and HDFC were among other gainers.
HCL Tech was the top loser in the pack, down 1.22 per cent. Tech Mahindra, Wipro, Cipla, Dr Reddy’s Labs, ICICI Bank, Infosys, Bajaj Finserv and Divi’s Labs were among those that traded in the red.
FACTORS DRIVING MARKETS
Good news
Evergrande offloading assets: Market will focus on whether embattled property developer China Evergrande offers any respite to investors looking for signs of asset disposals. Shares in the company were halted for trading on Monday.
US-China trade: Top US trade negotiator Katherine Tai on Monday pledged to exclude some Chinese imports from tariffs imposed by former President Donald Trump while pressing Beijing in “frank” talks over its failure to keep promises made in Trump’s trade deal and end harmful industrial policies.
Bad news
Crude at a high: Oil prices reached a three-year peak on Monday after OPEC+ confirmed it would stick to its current output policy as demand for petroleum products rebounds, despite pressure from some countries for a bigger boost to production. US oil was steady at $77.60 a barrel, a day after hitting its highest since 2014. Brent crude stood at $81.30 after rising to a three-year top.
US default fears: US President Joe Biden said the federal government could breach its $28.4 trillion debt limit in a historic default unless Republicans join Democrats in voting to raise it in the next two weeks.
Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.67 per cent, while Nifty Midcap advanced 0.21 per cent. Broadest index on NSE, Nifty 500, was up 0.07 per cent.
HCFL, Trident, FDC, Gujarat Gas, Deepak Nitrite and Oil India were gainers from the space while Mindtree, Bharat Forge, IndiaMart Intermesh, Quess Corps, Fine Organics and Dilip Buildcon were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped as much as 1.3 per cent, falling for a third consecutive session. Japan stocks were down 2.8 per cent, South Korea gave up 2.5 per cent and Australia shed 1 per cent.
The drop in markets took MSCI’s main benchmark to 619.87, the lowest since November 2020. It has shed more than 5 per cent this year, with Hong Kong and Japanese markets among the big losers.
