RBI Doesn’t Trim Interest Rates Over Inflation Focus | Indian Markets End the Week Flat | Weekly Update April 6th
Hello Readers!
With the RBI’s decision to hold rates steady and the markets on a flat note but with weekly gains for the third consecutive week, there’s a lot to take away from how the past week went by! So, read on to dive into the RBI’s responsible but disappointing decision but right after we look at how the markets fared this week.
🧾In this Article
Weekly Market Wrap-up
Quick bites
Stocks in News
Sustainability Corner
Cover story: RBI Doesn’t Trim Interest Rates Over Inflation Focus | Indian Markets End the Week Flat
Key events
📈 Weekly Market Wrap-up
This week, the Indian stock market delivered a modest gain, with both the Sensex and Nifty rising. The Sensex closed the week at 74,248.22, up 596.87 points, translating to a gain of 0.81%. The Nifty followed suit, ending the week at 22,513.7, an increase of 186.8 points or 0.84%. While these gains might seem small, they come amidst global uncertainties and the RBI’s decision to maintain interest rates.
Winners and Losers:
Individual stock performance varied this week. Divi’s Lab emerged as the champion, surging an impressive 8.73% (₹3,726.70 to ₹3,784). HDFC Bank wasn’t far behind, climbing 6.99% (₹1,530.00 to ₹1,554.00). Shriram Finance, NTPC, and Tata Steel also joined the party, each rising over 4.5%. (Here’s a quick look: Shriram Finance – Up 6.76% (₹2,498.10 to ₹2,532.00), NTPC – Up 5.63% (₹351.55 to ₹358.20), Tata Steel – Up 4.78% (₹160.85 to ₹164.10)). However, the gains weren’t universal. Hero MotoCorp skidded the most, falling 4% (₹4,469.50 to ₹4,528.65). Nestle India, Bharti Airtel, Cipla, and Grasim Industries also ended the week in negative territory, with losses between 2.34% and 3.25%.
Sector Spotlight:
While the overall market saw a moderate rise, a closer look at individual sectors reveals a more varied picture. The tech sector, represented by the BSE IT index, emerged the clear winner, surging 1.18% (or 419.81 points). The healthcare and consumer durables sectors also displayed positive momentum, gaining 0.53% and 1.41% respectively. This translates to point increases of 102.56 for healthcare and a more significant jump of 493.02 points for consumer durables. However, the FMCG sector lagged behind, managing a gain of only 0.53% (or 1224.24 points).
Market Breadth:
This week, broader markets outperformed their larger peers. The S&P BSE Midcap and Smallcap indices both closed 0.5% higher on Friday, indicating a positive sentiment among smaller companies. Additionally, market breadth favored buyers, with over 62% of stocks on the BSE advancing and only 36% declining. This translates to 2,429 stocks rising compared to 1,413 declining, with 106 remaining unchanged.
Rupee Report:
The Indian rupee displayed resilience this week, closing at 83.2950 against the U.S. dollar. This translates to a gain of nearly 0.2% compared to the previous week and a rebound from a record low of 83.4550. This positive movement was fueled by dollar sales from foreign and state-run banks, coupled with the RBI’s decision to maintain interest rates.
Gold Surges:
Gold prices continued their upward trend this week, registering a gain of 5.67%. This positive momentum aligns with the global trend of gold being seen as a safe-haven asset amidst market uncertainties.
Global Gossip:
Global stock markets offered a mixed performance this week. The US markets, a key indicator for global trends, continued their strong run. The S&P 500 climbed over 2%, nearing a record high but not quite reaching it. European markets were more muted, with the pan-European STOXX Europe 600 Index ending slightly positive (around 1%), as dovish signals from central banks continued to buoy investor sentiment. However, regional variations emerged. France’s CAC 40 Index dipped slightly, while the UK’s FTSE 100 gained around 3%, suggesting some cautious optimism in the British economy. In Asia, Japan outperformed, with the Nikkei 225 Index and the broader TOPIX Index rallying to multi-year highs, fueled by the Bank of Japan’s recent tweaks and expectations of a more balanced approach to monetary policy from the US Federal Reserve. Overall, the global market picture displayed a cautiously optimistic tilt this week, with central bank policies and regional economic outlooks still influencing investor sentiment.
Bottom Line
Despite the RBI’s decision to hold interest rates steady, the Bank Nifty maintained its momentum, staying above the crucial level of 48,000. Analysts believe this momentum could propel the index to new highs in the coming week, potentially reaching the 50,000 mark. Additionally, aggressive buying observed at lower levels suggests a supportive base for the market at around 48,200-48,000, further contributing to the bullish sentiment.
🍟 Quick Bites
- 🛢️ India’s windfall tax on crude oil increased from ₹4,900 to ₹6,800 per tonne.
- 📈 India’s Services PMI climbed to 61.2 in March from 60.6 in February 2024.
- 🏏 IPL viewership hit a record-breaking 35 crore for the first 10 matches this season.
- 📊 A record 1.85 lakh companies and LLPs were incorporated in 2023-24, according to the Corporate Affairs Ministry.
- ✈️ Virgin Atlantic will launch a second daily Mumbai-London flight in October 2024.
- 💰 HDFC Mutual Fund will stop lump sum investments in its HDFC Nifty Realty Index Fund starting April 8th. SIPs and top-ups will be limited to ₹1 lakh.
- 📉 The market lot size for derivative contracts of Nifty 50, Nifty Financial Services, and Nifty Midcap Select indices will be reduced by NSE from April 26th. Nifty 50’s market lot will be cut from 50 to 25.
- 💉 Bharat Biotech and Serum Institute have joined forces to produce and supply oral polio vaccines.
- 🏭 India’s manufacturing output reached a 16-year high in March 2024, based on HSBC India Manufacturing PMI data.
- 🚆 A record 7,180 kilometers of Indian railway tracks were electrified in 2023-24.
- 🥤 PepsiCo India is investing ₹1,266 crore for a flavor manufacturing plant in Ujjain, Madhya Pradesh.
- 💼 The Bharti Hexacom IPO is open for subscription from April 3rd to 5th.
📰 Stocks in News
- ☀️ UltraTech built a 100 MW solar plant in Rajasthan to power its facilities across India.
- 💰 Vedanta will raise ₹2,500 crore through debt, while KEC International secured ₹816 crore in orders.
- 💡 Power Finance paid a record ₹2,033 crore dividend to the government.
- 🏦 Union Bank raised ₹4,200 crore for overseas expansion, and Brigade Enterprises plans a ₹340 crore office space in Bengaluru.
- 🏍️ Hero Moto faces a ₹605 crore tax notice, while Maruti Suzuki crossed 3 crore vehicles produced in India.
- 🔗 Jindal Stainless will sell its 26% stake in Jindal Coke by September.
- 🖥️ HCL Tech partners with Google to train employees on Gemini AI, and Vodafone-Idea (Vi) approves a ₹20,000 crore fundraising.
- 🔌 Tech Mahindra opened a digital transformation center in Pune with AVEVA.
- ✈️ IndiGo signed a deal with Malaysia Airlines for better connectivity.
- ⚙️ NALCO achieved record metal sales and production in FY24.
- 🏭 UltraTech’s capacity surpassed 150 million tonnes with new plants.
- 👗 Aditya Birla Fashion plans to demerge and list its fast fashion business Madura Fashion & Lifestyle separately.
- 💡 IndiGrid began a new electricity transmission project in Beed, Maharashtra.
- 🍽️ Zomato faces a ₹184 crore penalty for service tax non-payment.
- 💸 IREDA loaned a record ₹37,354 crore in FY24.
- 🏢 Sobha received a ₹46 crore tax notice.
- 🚗 Tata Tech partnered with BMW for IT and auto software hubs in Chennai, Bangalore, and Pune.
- 💼 IIFL will buy ₹284 crore worth of NSE shares through an off-market transaction.
- ⛏️ NMDC became the first miner to produce 45 million tonnes of iron ore in a year.
- 💼 Infosys faces a ₹341 crore tax notice, and JSW Energy plans to raise ₹5,000 crore via QIP.
🌱 Sustainability Corner
👀 The decision to invest in a manufacturing plant for electric vehicles in India now rests with Tesla Inc. following the government’s reduction of import duties on EVs, as indicated by India’s industry secretary, Rajesh Kumar Singh.
🚗 BMW introduces the i5 M60 EV in India as its 6th electric model, with bookings now open and deliveries starting in May.
🌍 Tesla plans to send a team to India in late April to explore potential sites for a $2-3 billion electric car plant, amid slowing demand in the US and China and increasing competition, focusing on states like Maharashtra, Gujarat, and Tamil Nadu, which have automotive hubs.
🛵 Noida-based electric two-wheeler manufacturing startup AMO Mobility has introduced a new high-speed smart two-wheeler called Jaunty i Pro, priced at INR 1.15 lakh.
📉 Concerns about Tesla’s market dominance and leadership arise as its drop in quarterly sales coincides with increasing competition from rivals like BYD, Kia, and Hyundai.
🔬 Researchers in Japan have discovered a method involving caffeine to enhance the efficiency and reduce costs of energy storage, addressing challenges in alternative-energy technologies.
🚙 Xiaomi’s debut EV, the SU7, has received over 100,000 orders and started deliveries, entering the Chinese EV market with a competitive price below $30,000, positioning it against Tesla’s Model 3.
🏍️ Komaki’s Cat 2.0 NXT electric moped, priced at INR 99,500, targets delivery operators, offering a range of 110 km to 140 km and a maximum speed of 79 kmph, supporting a load capacity of 350kg with a limited-time cashback of INR 5000 until 30th April.
🛴 Ola Electric reveals Ola Solo, India’s first autonomous electric scooter, which is fully autonomous, AI-enabled, and a traffic-smart scooter.
💹 Xiaomi’s surge in stock value follows the successful launch of its debut electric vehicle, the SU7, despite predictions of significant per-car losses.
📜 India’s new EV policy permits the import of EVs from any country, including China, with import duty concessions for companies investing over $500 million in local manufacturing.
💼 India’s new EV policy offers concessional tariffs, including a reduced customs duty of 15%, to global EV makers like Tesla to encourage local manufacturing, sparking debate over its impact on Indian players like Tata Motors.
📈 Electric two-wheeler sales jumped by 33.3% in 2023-24 YoY, with 910,930 units of e2w sold in 2023-24, compared to 682,937 units in 2022-23, according to data on the Vahan portal.
RBI Doesn’t Trim Interest Rates Over Inflation Focus | Indian Markets End the Week Flat
This week, the Indian stock market closed flat, with investors digesting a mix of positive and negative news. The Reserve Bank of India’s (RBI) decision to hold interest rates steady came as a bit of a disappointment to some who were hoping for a cut to boost economic growth. However, the central bank’s decision reflects its continued focus on controlling inflation, which remains a key concern.
On the positive side, the World Bank upgraded India’s growth forecast for the current fiscal year, citing the country’s strong economic fundamentals and resilience. This positive outlook underscores the enduring strength of the “India story,” which continues to attract investors despite short-term market fluctuations.
Let’s delve deeper into these developments and what they mean for you, the investor.
RBI Maintains Status Quo on Rates to Tame Inflation
The RBI’s Monetary Policy Committee (MPC) met this week and decided to keep its key benchmark rates, the repo and reverse repo rates, unchanged. This decision, while not unexpected by most analysts, might have left some hoping for a rate cut in the dust.
The rationale behind the RBI’s decision is clear – inflation remains a top priority. While global commodity prices have shown some signs of softening recently, inflationary pressures persist in India. The RBI wants to ensure that inflation doesn’t spiral out of control, which could erode purchasing power and dampen economic growth in the long run.
Holding Rates: Not All Doom and Gloom
While a rate cut might have provided a temporary boost to the stock market, it’s important to consider the bigger picture. By keeping rates stable, the RBI is sending a strong signal that it’s committed to controlling inflation. This can be positive for the long-term health of the Indian economy and can foster a more stable investment environment.
World Bank Bullish on India: A Shot in the Arm
Countering the short-term disappointment of no rate cut is the World Bank’s recent upgrade of India’s growth forecast. The Bank now expects the Indian economy to grow at a healthy 6.5% in the current fiscal year, up from its earlier projection of 6.1%. This revision reflects the Bank’s confidence in India’s strong economic fundamentals, such as a young and growing population, a rising middle class, and a dynamic digital economy.
The India Story: Enduring Strength
The World Bank’s upgrade is just another piece of evidence supporting the enduring strength of the “India story.” The country’s long-term growth potential remains robust, driven by factors like increasing domestic consumption, government spending on infrastructure, and a focus on manufacturing. This positive outlook continues to attract foreign investors and fuel optimism about the Indian market.
What Does This Mean for You?
This week’s events might have caused some short-term volatility, but it’s important to maintain a long-term perspective. The RBI’s focus on inflation control is a positive sign for the long-term health of the Indian economy. Additionally, the World Bank’s upgraded forecast reinforces the “India story” and its potential for continued growth.
So, if you’re an investor in the Indian market, don’t be discouraged by the lack of a rate cut this week. Focus on the bigger picture – India’s strong economic fundamentals and its long-term growth trajectory. Remember, short-term fluctuations are inevitable, but by staying invested in the Indian story, you can position yourself to benefit from the country’s long-term potential.
In Conclusion
This week was a mixed bag for the Indian market. While the RBI’s decision to hold rates steady might have dampened some spirits, the World Bank’s positive outlook on India provides a counterbalancing force. The key takeaway is to focus on the long-term fundamentals of the Indian economy, which remain strong. By staying invested for the long haul, you can position yourself to capture the immense potential of the “India story.”
Upcoming key financial events for the week:
| Date | Event |
| 10- Apr-24 | – USD Core CPI m/m |
| – USD CPI y/y | |
| 11-Apr-24
|
– USD FOMC Meeting Minutes |
| – EUR Monetary Policy Statement | |
| – USD Core PPI m/m | |
| – USD Unemployment Claims | |
| – USD 30-y Bond Auction | |
| 12-Apr-24
|
– INR CPI (YoY) (Mar) |
| – GBP GDP m/m | |
| – USD Prelim UoM Consumer Sentiment | |
10-Apr-24 | – USD Core CPI m/m | | | – USD CPI y/y | | | – USD FOMC Meeting Minutes | |———–|————————————| | 11-Apr-24 | – EUR Monetary Policy Statement | | | – USD Core PPI m/m | | | – USD Unemployment Claims | | | – USD 30-y Bond Auction | | | – INR CPI (YoY) (Mar) | |———–|————————————| | 12-Apr-24 | – GBP GDP m/m | | | – USD Prelim UoM Consumer Sentiment
