Sensex trades lower, Nifty below 9,250 ahead of RBI policy review

The S&P BSE Midcap and S&P BSE Smallcap indices were trading marginally lower

The benchmark indices on Thursday continued to trade lower after logging their fresh closing highs in the previous session as investors booked profits ahead of the Reserve Bank of India's monetary policy outcome, while negative trend seen in in Asian markets also impacted the sentiment. 
 

At 12:36 am, the S&P BSE Sensex was trading at 29,848, down 126 points, while the broader Nifty50 was ruling at 9,228, down 37 points. 

In the broader market, the S&P BSE Midcap and S&P BSE Smallcap indices dipped 0.3% and 0.4%, respectively.

"The Nifty index on Wednesday formed a Dragon Fly Doji candle on the daily chart which indicates that buying interest is seen on declines but momentum is missing at higher zone. Now it has to hold above 9,250 to extend its up move towards 9,350 and 9,380 while on the downside multiple supports are seen at 9,218 and 9,191 zones," said brokerage Motilal Oswal Securities in a technical note.

Sectors and stocks

Nifty FMCG index (down 0.8%) was the leading sectoral loser, led by losses in Jubilant FoodWorks (down 1.4%), Hindustan Unilever (down 1.4%), and ITC (down 1.2%).

Stocks of rate sensitive sectors were trading lower ahead of RBI policy with Nifty Bank, and Nifty Realty indices shedding 0.2% and 0.1%, respectively, while Nifty Auto index was trading flat.

Shares of railway related companies such as Texmaco Rail & Engineering, Titagarh Wagons, Kernex Microsystems, BEML and Stone India rallied up to 19% in intra-day trade after the government approved setting up of Rail Development Authority.

Services sector expands in March

Moving away from the contractions related to demonetisation, the services sector maintained a stronger rate of expansion in February, the widely tracked Nikkei’s Purchasing Managers’ Index (PMI) survey showed on Thursday.

PMI for services rose to 51.5 points from 50.3 points in February. A reading above 50 signifies expansion, while one below that shows contraction. 

FII inflows

On Wednesday, foreign portfolio investors bought equities worth Rs 340 crore, while they parked over Rs 4,000 crore in equities so far this month. Meanwhile, domestic investors sold equities worth Rs 194 crore in the previous session, provisional data available with BSE showed. 

RBI policy today

The monetary policy committee of the Reserve Bank of India (RBI) is likely to leave the repo rate at 6.25%, where it has been since October, a Reuters poll found. However, investors are expecting the RBI to announce measures to absorb liquidity that has accumulated post demonetisation. 

Minutes of Fed meet

The minutes of US Federal Reserve's March policy meeting showed most policymakers think the US central bank should take steps to begin trimming its $4.5 trillion balance sheet this year as long as the economic data holds up. The minutes also showed "some participants viewed equity prices as quite high relative to standard valuation measures."

Meanwhile, US House of Representatives Speaker Paul Ryan on Wednesday said there was no consensus on tax reform and it would take longer to accomplish than repealing and replacing Obamacare would.

Global markets

Asian markets fell on Thursday, with risk appetite soured by signs the Fed might start paring its king-sized balance sheet later this year just as the chances of an early US fiscal stimulus faded further.

Investors were also wary ahead of a potentially tense meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, the first between the world's two most powerful leaders.

Lingering fears of a possible trade war kept Asian markets on edge. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2%. Japan's Nikkei fell 1%, Australia's ASX 200 eased 0.3%, and Hong Kong's Hang Seng index shed 0.5%, while China's Shanghai Composite bucked the trend to gain 0.2%. 

Overnight, the Dow ended down 0.2% while the S&P 500 lost 0.31% and the Nasdaq 0.58%.