Nifty in red, rupee weak as upcoming US Fed meeting jangles nerves

Not a great start to the Indian markets a day after the central bank left rates unchanged.The RBI left policy rate unchanged in a scenario where sharp rupee depreciation has clouded inflation outlook and volatility in portfolio flows has increased CAD financing risks.

Expectations are that the RBI will effect few rate cuts in the remainder of the fiscal.

While the BSE Sensex opened down 70 points at 19249, the Nifty opened down 26 points at 5823.

The BSE banking index is at the bottom of the sectoral pack, with the index down 0.6 percent; ICICI Bank, SBI, Bank of Baroda, HDFC Bank are all trading in the red as Reserve Bank of India’s status quo policy dampened spirits on Dalal Street.

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However, market analyst Sudarshan Sukhani is mildly bullish on the Nifty.

“We have long positions and we would maintain them. Broadly 5,800 as a support level should hold. If the Nifty cracks below it and then shows sign of not going back that would be a stop loss,” he said in an interview with CNBC-TV18.

Bharti Airtel (up 1.54 percent), M&M, Infosys , Wipro and L&T are among the key gainers in Sensex.

Globally, the two-day Fed meeting that kick starts today, will be the main focus for global markets this week. Investors will be listening for details on when the Fed may start scaling back its $85 billion monthly bond purchases. The Fed is also expected to provide an update on its economic projections for 2013-2015.

Asian shares were trading lower. The Nikkei index in Japan was down 0.5% while the Hang Seng index in Hong Kong was down 0.8%. The Shanghai Composite index in China was almost unchanged.

[caption id=“attachment_882431” align=“alignleft” width=“380”] The FIIs were net sellers of Rs1.65bn in the cash segment on Monday, while the domestic institutional investors (DIIs) were net buyers of Rs3.61bn,[/caption]

Meanwhile the rupee again opened week today at 58.3 against the US dollar ahead of the Fed’s meeting.

The Fed’s bond-buying programme, along with very accommodative monetary policies by other central banks to promote growth, such as the Bank of Japan, has underpinned market sentiment broadly, providing investors abundant funds they could put to work in higher-yielding “risk” assets, such as shares.

Stocks in news

GMR Infrastructure is down 0.49 % even though the Bangalore-based infrastructure company, which was forced to hand over the Male airport to the Maldives government, has got a breather. The Anti-Corruption Commission (ACC) of Maldives has said that there was no corruption involved in leasing of Ibrahim Nasir International Airport to GMR.

Mahindra and Mahindra is up half a percent after Ssangyong Motor Co, part of the Mahindra Group, today said it has sold a total of 12,730 vehicles in May, this year, a rise of over 25 per cent over the year-ago period.