Sensex, Nifty to open higher ahead of RBI policy; rate-sensitive stocks in focus

The domestic benchmarks, the BSE Sensex and the NSE Nifty, are set to open higher on Wednesday, following strong cues from Asian peers and a solid finish on Wall Street overnight. The positive trends on SGX Nifty also indicated a gap-up opening for the domestic bourses, with SGX Nifty futures trading 81 points, or 0.5%, higher at 16,506 on the Singapore Stock Exchange at 7:50 AM. Investors will keep a close eye on the interest rate decision by the Reserve Bank of India, which will be announced later today. Rate-sensitive stocks including banks, auto, realty, and financial services will be in focus ahead of the policy decision.

On Tuesday, the domestic equity benchmarks ended lower for the third straight session as caution prevailed in the market ahead of the highly-anticipated Reserve Bank policy meeting due on Wednesday. The weak global markets and persistent foreign funds outflow also injected negativity into the market. The BSE Sensex tumbled 568 points, or 1.02%, to settle at 55,107, while the NSE Nifty dropped 153 points, or 0.92%, to 16,416. The top laggards in the BSE Sensex pack were Titan, Dr. Reddy's, Larsen & Toubro, HUL, Asian Paints, Bajaj Finance, TCS, and Nestle. In contrast, NTPC, Maruti, M&M, and Bharti Airtel were among the notable gainers.

Stocks to watch

Punjab National Bank (PNB): The board of the state-owned lender has approved an investment of ₹500 crore in PNB Housing Finance by participating in its rights issue. PNB Housing Finance plans to raise ₹2,000 crore by issuing non-convertible debentures (NCD) on a private placement basis. The board of the mortgage lender will meet on June 14 to consider this proposal.

State Bank of India (SBI): The PSU lender has appointed Alok Kumar Choudhary as managing director for a period of two years. Choudhary, who was deputy managing director (finance) until this appointment, had started his career at SBI as a probationary officer.

Interglobe Aviation (IndiGo): Domestic brokerage Centrum Broking has recommended a "buy" call on the low-cost carrier and pegged the target price of ₹2,284, as against its current market price of ₹1,818.

Zee Entertainment Enterprises: Life Insurance Corporation of India (LIC of India) has purchased additional two lakh equity shares in the company via open market transactions on June 6. With this, LIC's stake in the company rose to 5%.

RITES: The state-owned transport infrastructure company has inked a pact with Grands Trains DU Senegal for technical cooperation in the railway sector.

SpiceJet: The low-cost carrier has reportedly extended its employee stock ownership plan (ESOP) scheme to certain mid-level employees as well as "critical resource" staff for their performance during the Covid-19 crisis.

Hindustan Copper: The company resumed mining operations at the Surda mine in Ghatshila (Jharkhand) on Tuesday after it received required approval from the state government and the ministry of environment.

Wockhardt: The drug maker has appointed Deepak Madnani as the Chief Financial Officer with immediate effect on June 7.

Here are the key things investors should know before the market opens today:

Wall Street rise in choppy trade

In the overnight trade, all three major U.S. indices ended higher for the second day, led by gains in technology and energy stocks. The market witnessed choppy trade, with indices falling in early session, while it rebounded strongly in the late trade as U.S. Treasury yields fell amid speculation that the worst of inflation may be in the past. The Dow Jones Industrial Average rose 0.8%, the S&P 500 rallied 0.95%, and the Nasdaq Composite ended 0.94% higher.

Asian stocks trade higher

Shares in the Asia-Pacific region were trading mostly in the green zone in early deals on Wednesday, following a strong finish on Wall Street overnight. The market sentiment was lifted amid hopes that ease in Covid-19 curbs in China would boost global economic recovery. As per report, Beijing has lifted restrictions and allowed restaurants and cinemas to open, raising hopes for an economic recovery.

Regional heavyweight Japan’s Nikkei 225 surged 1%, South Korea’s KOSPI gained 0.3%, and the Straits Times Index in Singapore climbed 0.15% and Australia’s ASX 200 gained 0.7%.

In mainland China, shares were trading marginally higher, with the Shenzhen Component and the Shanghai Composite rising nearly 0.2% each.

RBI policy in focus

The Reserve Bank of India (RBI) is expected to continue raising interest rates to tackle a burgeoning inflation problem, while it is likely to maintain an accommodative policy stance to support the economy battered by the coronavirus pandemic and the Russia-Ukraine war. Most of the market analysts expect the six-member monetary policy committee (MPC) of the RBI to hike the policy rate (repo rate) by up to 50 basis points (bps) to 4.9%. The outcome of MPC review meeting will be revealed during the day.

World Bank cuts GDP forecasts to 7.5% for FY23

The World Bank on Tuesday lowered real gross domestic product (GDP) growth forecast for India to 7.5% for current financial year (FY23), from 8% projected earlier, citing inflationary pressures, supply-chain constrains, and Russia-Ukraine war, which offset buoyancy in the recovery of services consumption from the pandemic. This is the second time the apex body has revised downward its GDP growth forecast for India in FY23. In April, it had cut projection from 8.7% to 8%.

Crude prices steady

The price of Brent and U.S. crude was steady on Wednesday, while a decline in Russian production and improving demand from China added to the pressure on already tight supplies. Traders also remained concerned about a production hike by OPEC+ countries as experts believe that it would not be sufficient to meet energy demand. The Organisation of the Petroleum Exporting Countries and allies (OPEC+) in its last policy meeting agreed to increase output in July and August by 648,000 barrels per day, or 50% more than previously planned.

In Asian trading hours, the Brent oil for July delivery was up 0.1% to $120.7 per barrel, while the U.S. West Texas Intermediate (WTI) crude July futures rose 0.2% to $119.7 a barrel.

FIIs remain net sellers, DIIs net buyers

The foreign institutional investors (FIIs) extended their selling spree in the Indian equity market on June 7, while domestic institutional investors (DIIs) continued to support the market. As per the exchange data, FIIs net sold shares worth ₹2,294 crore, while DIIs net purchased shares worth ₹1,311.15 crore.