Dear
Trader…
Indian
equity markets ended lower for the third consecutive session, falling over 2
per cent on Wednesday after the Reserve Bank of India (RBI) announced a
surprise repo rate hike in an unscheduled meeting. The markets were, already on
tenterhooks awaiting the US Federal Reserve meeting outcome later tonight,
wherein a 50 bps rate hike is anticipated.
After making
slightly positive start, Markets traded deep in red in late afternoon session
after Reserve Bank of India (RBI) has increased the policy repo rate under the
liquidity adjustment facility (LAF) by 40 basis points to 4.40 per cent with
immediate effect. RBI said core inflation is likely to remain elevated in the
coming months, reflecting high domestic pump prices and pressures from prices
of essential medicines. It also said renewed lockdowns and supply chain
disruptions due to resurgence of COVID-19 infections in major economies could
sustain higher logistics costs for longer.
Adding more
concerns among traders, a paper by the National Council of Applied Economic
Research (NCAER) said that India should take a cautious approach towards
launching a central bank digital currency (CBDC) as it could be hazardous to
institutions, retail-end users, and to the reputation of the central bank.
Nifty
futures opened at 17115.10 points against the previous close of 17084.25 and
opened at a low of 16643.20 points. Nifty Future closed with an average
movement of 494.55 points and a decline of around 367.25 points and 16717.00 points…!!
On the NSE, the
midcap 100 index will decline 2.12% and smallcap 100 index is closing decline 2.35%.
Speaking of various sectoral indices, Media, Realty, Metal and PSU Bank stocks
saw heavy selling on the NSE, while all other sectoral indices also closed
lower.
At the start
of intra-day trading, June gold opened at Rs.50675, fell from a high of Rs.50830
points to a low of Rs.50570 with a decline of 126 points, a trend of around Rs.50682
and May Silver opened at Rs.62207, fell from a high of Rs.62473 points to a low
of Rs.61841, with a decline of 536 points, a trend of around Rs.61946.
Meanwhile,
SBI research in its latest Ecowrap report has said that the share of
incremental bank credit in incremental nominal Gross Domestic Product (GDP) is
likely to cross the 50 per cent mark in the current financial year (FY23), from
a decade low of 27 per cent in FY2022. The incremental credit to GDP share was
as high as 63 per cent in the pre-pandemic year (FY19). The average share was
50 per cent for the seven-year period ended FY20. A higher credit-to-GDP ratio
indicates aggressive and active participation of the banking sector in the real
economy, while a lower number shows the need for more formal credit.
The report
said ‘for FY23, we believe that the share of bank credit may again breach the
50 per cent mark indicating the increasing role of banks in economic growth’.
In the fiscal ended 2021-22, banks’ credit grew by 9.6 per cent, driven by all
major sectors. FY22 ended with an incremental credit growth at Rs 10.5 lakh
crore, 1.8 times higher than growth of Rs 5.8 lakh crore in FY21. Segment-wise,
the jump in credit to MSMEs and infrastructure was strong at Rs 2.3 lakh crore
while credit to housing and the NBFC sector was close to Rs 2 lakh crore.
Retail loans expanded by a sharp Rs 3.7 lakh crore, driven by a surge in
personal loans apart from housing credit. Credit to agriculture was at Rs 1.3
lakh crore.
Technically, the important key resistances are placed in Nifty future are at 16770 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 16808 – 16838 levels. Immediate support is placed at 16606 – 16533 levels.
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