Despite The Declines, Markets Remain Resilient

Domestic indices found support as the central bank decided to leave the policy repo rate unchanged, while a robust investor sentiment was evident in the real estate sector thanks to record residential sales 

At the onset of the fortnight, Indian frontline indices exhibited a subdued performance as investors held their breath in anticipation of the Reserve Bank of India’s forthcoming monetary policy decision. The RBI’s Monetary Policy Committee (MPC) has, for the fourth consecutive time, opted to maintain the status quo, leaving the policy repo rate untouched at 6.5 per cent. Buoyed by the decision, the BSE Sensex and Nifty 50 managed to gather positive momentum, concluding the fortnight period with gains of 0.69 per cent and 0.57 per cent, respectively. 

While the BSE Small-Cap index continued its outperformance compared to the main indices, the BSE Mid-Cap index experienced marginal losses. Over the last fortnight, FIIs registered an outflow of ₹12,383.23 crore while DIIs provided strong market support with a notable inflow of ₹11,521 crore. Although investor sentiment varied across different sectors, the BSE Realty sector notably captured investors’ attention, recording a remarkable gain of over 6 per cent, bolstered by record demand within the sector. Residential sales in India’s seven leading property markets have demonstrated impressive growth during the initial nine months of 2023, marking the highest levels since 2008. 

Notably, these sales have already reached 91 per cent of the total sales recorded in the entire year of 2022. Shares of Prestige Estates Projects Ltd. and Phoenix Mills Ltd. were the driving forces behind this rally, registering impressive gains of 18 per cent and 11 per cent, respectively. The fast-moving consumer goods (FMCG) and automotive sectors also emerged as top performers thanks to the elevated optimism stemming from increased demand for groceries and packaged foods during the festive season,as well as robust sales figures, particularly in the SUV segment, respectively. 

BSE Power bore the brunt of the market’s downturn, losing more than 2 per cent, with JSW Energy Ltd., CG Power and Industrial Solutions Ltd. and Adani Power Ltd. each contributing hefty 10 per cent declines. The primary market continued to exhibit resilience and high activity, with 14 companies successfully concluding their IPOs, and seven companies making their stock market debut, a majority of which received substantial investor interest. RBI Governor Shaktikanta Das stressed that the central bank is aiming for inflation at 4 per cent, not within the range of 2-6 per cent. 

The committee also projected that CPI inflation will moderate to 5.2 per cent in the coming year, down from the current level of 6.8 per cent. This moderation is expected to be driven by a decline in the prices of vegetables and cooking gas cylinders. According to data released by the Ministry of Statistics and Programme Implementation, India’s headline retail inflation rate declined to 5.02 per cent in September. In August, India’s industrial production surged to 10.3 per cent on an annual basis, a substantial increase from the 5.7 per cent growth observed in July.