Benchmark stock market indices started the day with minimal movement on Wednesday, as the rupee reached a historic low and investors anticipated significant updates from the RBI’s Monetary Policy Committee (MPC).
The S&P BSE Sensex opened lower by 281.56 points at 84,856.71, while the NSE Nifty50 decreased by 105.10 points to 25,927.10 by 9:40 am.
According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, the ongoing decline in the rupee and the lack of RBI intervention to stabilize it are causing apprehension and leading to a gradual market downturn.
He mentioned that despite positive indicators such as increasing corporate profits and a robust GDP growth recovery, foreign institutional investors (FIIs) are selling off due to rupee depreciation. The expert highlighted that a potential resolution in the India-US trade agreement, expected this month, could reverse the rupee’s decline. However, the specifics of the trade deal’s tariffs will play a crucial role.
Tata Consultancy Services led the gainers on the Sensex with a 1.79% increase, followed by Infosys at 1.16%, Tech Mahindra at 0.74%, ICICI Bank at 0.35%, and Axis Bank at 0.16%. The top losers included Dr. Reddy’s Laboratories, State Bank of India, NTPC, Mahindra & Mahindra, and Tata Motors DVR (TMV).
Dr. Vijayakumar explained that the recent correction in the Nifty, around 300 points from its peak, is influenced by technical factors like Bank Nifty restructuring and concerns over rupee devaluation. He emphasized that the adjustments in Bank Nifty’s composition, affecting stocks like HDFC Bank and ICICI Bank, are technical and not linked to the fundamental strength of these companies. The expert is optimistic that these banking giants will bounce back due to improving credit growth and solid fundamentals.
He recommended investors to focus on high-quality growth stocks in the large and midcap segments during this uncertain period, advising caution with overvalued small-cap stocks.
Please note that the opinions expressed in this article belong to the mentioned experts and brokerages and do not necessarily represent those of the India Today Group. It is advisable to seek advice from qualified financial professionals before making investment decisions.