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Market Commentary - Mid-Session

Indices trade near flat line; PSU bank shares decline

07-Feb-2025, 12:41
The domestic equity benchmarks traded near the flat line with some negative bias in early afternoon trade, following the Monetary Policy Committee's unanimous decision to reduce the repo rate by 25 basis points to 6.25%. This marked the first rate change in two years, driven by easing inflation and slowing economic growth. The committee highlighted its neutral stance, focusing on aligning inflation with targets while supporting economic growth. The Nifty traded below the 23,600 level. PSU bank shares extended losses for the second consecutive trading session.

At 12:30 IST, the barometer index, the S&P BSE Sensex, shed 84.54 points or 0.11% to 77,973.62. The Nifty 50 index lost 6.55 points or 0.03% to 23,596.80.

In the broader market, the S&P BSE Mid-Cap index rose 0.05% and the S&P BSE Small-Cap index fell 0.45%.

The market breadth was negative. On the BSE, 1,587 shares rose and 2,149 shares fell. A total of 173 shares were unchanged.

Economy:

The Reserve Bank of India's (RBI) six-member Monetary Policy Committee (MPC) Friday cut the repo rate'the rate at which the RBI lends to other banks'by 25 basis points to 6.25% after keeping it unchanged for two years. This is the first rate cut initiated by the RBI in five years, the last one being in May 2020. RBI, however, continues with the neutral monetary policy stance and remains unambiguously focused on a durable alignment of inflation with the target while supporting growth. The decisions are 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, the central bank noted. This was the first RBI policy under the new Governor Sanjay Malhotra and also the first RBI MPC meeting after the Union Budget 2025-2026 was presented on February 1.

Derivatives:

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, declined 3.56% to 13.67. The Nifty 27 February 2025 futures were trading at 23,657, at a premium of 60.20 points as compared with the spot at 23,596.80.

The Nifty option chain for the 27 February 2024 expiry showed maximum Call OI of 50.5 lakh contracts at the 24,000 strike price. Maximum put OI of 64.9 lakh contracts were seen at 23,000 strike price.

Buzzing Index:

The Nifty PSU Bank index slipped 1.25% to 6,204.30. The index fell 1.97% in two consecutive trading sessions.

Bank of Maharashtra (down 1.78%), Bank of Baroda (down 1.57%), State Bank of India (down 1.42%), Bank of India (down 0.86%), Punjab & Sind Bank (down 0.76%), Indian Overseas Bank (down 0.67%), Canara Bank (down 0.57%), Punjab National Bank (down 0.40%) and Indian Bank (down 0.38%) declined.

Stocks in Spotlight:

Kolte-Patil Developers shed 0.55%. The company has said that it has signed a joint development deal for a residential/mixed used project located at Wadgaon Khurd, on Sinhagad road, Pune.

Cochin Shipyard slipped 3.46% after the company's consolidated net profit fell 27.6% to Rs 176.99 crore in Q3 FY25 as against Rs 244.38 crore posted in Q3 FY24. However, revenue from operations rose 8.6% YoY to Rs 1,147.64 crore in the quarter ended 31 December 2024.

Gulf Oil Lubricants India jumped 6.94% after the company's net profit jumped 21.59% to Rs 98.17 crore on 10.72% rise in revenue from operations to Rs 904.88 crore in Q3 FY25 over Q3 FY24.