Benchmarks trade with moderate losses; metal shares slide

The domestic equity benchmarks traded with modest cuts in mid-afternoon trade due to rising trade tensions, even though the Reserve Bank of India cut interest rates and moved to an accommodative stance. The Nifty traded near the 22,400 level.

Metal shares tumbled after advancing in the previous trading session.

The weekly Nifty50 Futures & Options (F&O) series expiry has been shifted to today due to the market holiday tomorrow in observance of Shri Mahavir Jayanti.

At 14:30 IST, the barometer index, the S&P BSE Sensex, declined 382.13 points or 0.51% to 73,844.95. The Nifty 50 index fell 136.20 points or 0.60% to 22,401.10.

The broader market underperformed the frontline indices, the S&P BSE Mid-Cap index slipped 0.80% and the S&P BSE Small-Cap index declined 1.20%.

The market breadth was weak. On the BSE, 1,321 shares rose and 2,472 shares fell. A total of 157 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, gained 3.90% to 21.24.

RBI Monetary Policy Meeting Outcome:

The Reserve Bank of India (RBI) monetary policy committee (MPC) has voted to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points with immediate effect.

The Monetary Policy Committee (MPC) held its 54th meeting from April 7 to 9, 2025 under the chairmanship of Sanjay Malhotra, Governor, Reserve Bank of India.

After assessing the current and evolving macroeconomic situation, the MPC unanimously voted to reduce the policy repo rate by 25 basis points to 6% with immediate effect.

Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) shall stand adjusted to 5.75%, and the marginal standing facility (MSF) rate and the bank rate to 6.25%.

This decision is in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.

MPC also decided to change the stance from neutral to accommodative. However, it noted that uncertainties remain high in the wake of the recent spurt in global volatility. Hence, the rapidly evolving situation requires continuous monitoring and assessment of the economic outlook.

On the domestic front, the RBI slightly lowered its GDP growth forecast for FY26 to 6.5%, down from 6.7% in its previous outlook. In Q1 it is projected at 6.5%; Q2 at 6.7%; Q3 at 6.6%; and Q4 at 6.3%. The risks are evenly balanced.

On inflation, the RBI appears more optimistic. It now projects CPI inflation for FY26 at 4%, down from the earlier 4.2%. Here is the quarterly split: Q1 at 3.6%; Q2 at 3.9%; Q3 at 3.8%; and Q4 at 4.4%. The risks are evenly balanced.

The MPC noted that inflation is currently below the target, supported by a sharp fall in food inflation. Moreover, there is a decisive improvement in the inflation outlook. As per projections, there is now greater confidence of a durable alignment of headline inflation with the target of 4% over a 12-month horizon.

The minutes of the MPCs meeting will be published on April 23, 2025. The next meeting of the MPC is scheduled from June 4 to 6, 2025.

Economy:

In India, growth is projected to accelerate to 6.7% in fiscal year (FY) 2025 and 6.8% in FY2026, according to the latest forecast by the Asian Development Bank (ADB). Growth in the sub-region is expected to rise from 5.8% in 2024 to 6.0% in 2025 and 6.2% in 2026.

Inflation in India is projected to moderate to 4.3% in FY2025 and 4.0% in FY2026, supported by easing food and global oil prices.

Buzzing Index:

The Nifty Metal index slipped 1.89% to 7,815.15. The index jumped 1.52% in the past trading session.

Welspun Corp (down 4.38%), Lloyds Metals & Energy (down 4.29%), Jindal Steel & Power (down 3.07%), Jindal Stainless (down 3.06%), Hindustan Zinc (down 2.86%), National Aluminium Company (down 2.35%), Adani Enterprises (down 2.22%), Tata Steel (down 2.2%), Hindalco Industries (down 1.43%) and Vedanta (down 1.34%) declined.

Numbers to Track:

The yield on India's 10-year benchmark federal paper shed 0.18% to 6.563 as compared with previous close 6.575.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 86.5800, compared with its close of 86.2600 during the previous trading session.

MCX Gold futures for 5 June 2025 settlement rose 2.08% to Rs 89,470.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.60% to 102.35.

The United States 10-year bond yield gained 2.04% to 4.347.

In the commodities market, Brent crude for June 2025 settlement tumbled $2.12 or 3.37% to $60.71 a barrel.

Stocks in Spotlight:

Prestige Estates Projects shed 0.68%. The company said that it had launched four projects across Bengaluru, Mumbai, and Hyderabad in Q4 FY25, and the aggregate gross development value (GDV) of these projects was Rs 16,133.8 crore.

Borosil declined 1.27%. The company announced that it has incorporated a wholly owned subsidiary, Stylenest India (SIL), on 8 April 2025.

Madhav Infra Projects jumped 7.60% after the company received a letter of acceptance from National Highways Authority of India (NHAI) for highway project worth Rs 323.82 crore.

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