Broader mkt underperforms; RBI cuts repo rate by 25 bps to 6%

The domestic equity benchmarks traded with moderate losses in early 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 below the 22,450 mark. PSU Bank shares declined 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 12:30 IST, the barometer index, the S&P BSE Sensex, tumbled 359.90 points or 0.47% to 73,875.62. The Nifty 50 index declined 105.30 points or 0.47% to 22,424.15.

The broader market underperformed the frontline indices, the S&P BSE Mid-Cap index slipped 1.01% and the S&P BSE Small-Cap index declined 1.22%.

The market breadth was weak. On the BSE, 1,157 shares rose and 2,451 shares fell. A total of 188 shares were unchanged.

Derivatives:

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, slipped 9.66% to 20.59. The Nifty 24 April 2025 futures were trading at 22,486.25, at a premium of 62.1 points as compared with the spot at 22,424.15.

The Nifty option chain for the 24 April 2025 expiry showed a maximum call OI of 43.8 lakh contracts at the 23,500 strike price. Maximum put OI of 44.5 lakh contracts was seen at a 21,000 strike price.

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 PSU Bank index tumbled 1.77% to 6,139.25. The index advanced 2.64% in previous trading session.

Bank of India (down 3.34%), Central Bank of India (down 3.13%), Union Bank of India (down 3.1%), Indian Bank (down 2.55%), State Bank of India (down 2.05%), Bank of Baroda (down 2.03%), UCO Bank (down 1.32%), Punjab National Bank (down 1.15%), Indian Overseas Bank (down 1.06%), and Canara Bank (down 0.95%) declined.

On the other hand, Bank of Maharashtra (up 0.55%) and Punjab & Sind Bank (up 0.11%) added.

Stocks in Spotlight:

Kranti Industries added 1.81% after the company received a purchase order worth Rs 6.84 crore from Bonfiglioli Transmission for the development of industrial machine parts (heavy-duty gearbox).

Vodafone Idea shed 0.70%. The company announced the allotment of equity shares worth Rs 36,950 crore to the Government of India, converting its spectrum dues into equity.

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