regular-article-logo Monday, 02 October 2023

RBI’s monetary policy committee starts three-day meet, investors stay on sidelines

While MPC will announce its decision on rates on Thursday, the US Federal Reserve is meeting next week with a pause on rates an option

Our Bureau Mumbai Published 07.06.23, 04:55 AM
Representational image.

Representational image. File Photo

Investors preferred to stay on the sidelines on Tuesday as the monetary policy committee of the Reserve Bank of India started its three-day deliberations amid expectations of a status quo in rates.

While MPC will announce its decision on rates on Thursday, the US Federal Reserve is meeting next week with a pause on rates an option.


Equity benchmarks BSE Sensex and Nifty closed marginally higher in a volatile session on Tuesday as fag-end buying in auto, industrial and commodity stocks helped the indices extend gains for a third straight day.

"While the markets ended flat, buying was seen in rate-sensitive stocks such as banking, auto and realty ahead of the RBI’s MPC meet later this week.

"With expectations rising that the central bank could once again take a pause on rate hikes, hopes of steady interest rates going ahead triggered optimism in the rate-sensitives," Shrikant Chouhan, head of equity research (retail), Kotak Securities Ltd, said.

After a see-saw session, the 30-share BSE Sensex eked out marginal gains of 5.41 points or 0.01 per cent to settle at 62792.88.

"Going ahead an important influencer will be the commentary on growth and inflation forecasts by the RBI following its MPC meeting, given the general consensus that rate pause will continue," said Vinod Nair, head of research, at Geojit Financial Services.

After the last MPC meeting in April, the RBI paused its rate hike cycle and stayed with the 6.5 per cent repo rate. Prior to that the central bank had cumulatively hiked the repo rate by 250 basis points since May 2022 in a bid to contain inflation.

Nifty futures

The National Stock Exchange (NSE) on Tuesday announced that it will shift the expiry of Bank Nifty Futures & Options (F&O) to Friday instead of Thursday, in a bid to steal a march over rival BSE Ltd.

On March 15, BSE had relaunched the Sensex and Bankex derivative contracts to boost its derivatives trading. To make it more attractive for investors, the bourse reduced the lot size for Sensex to 10 from 15 and to 15 from 20 in the case of Bankex.

The NSE said in a circular on Tuesday that based on market feedback, it is changing the expiry for Bank F&O to Friday from Thursday.

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