Sensex, Nifty see marginal gains, investors turn attention from election to RBI monetary policy

On June 7, Sensex and Nifty recorded slight increases in early morning trading, in anticipation of the RBI policy announcement and commentary. The gains in Nifty were driven primarily by IT and healthcare stocks, while the auto and financial services sectors saw declines. By 9:27 am, the Sensex had risen by 332 points, or 0.4%, reaching 75,406, and the Nifty 50 had increased by 104 points, or 0.5%, reaching 22,926. In the market, approximately 2,168 shares advanced, 581 shares fell, and 85 shares remained unchanged.

"The uncertainty on the political front has been resolved. Today, markets are focused on the RBI policy, which will provide clarity on interest rates and the economic situation. Although we might see a flattish move until 10:00 am, we'll get a clearer direction after that," said Kunal Rambhia, Fund Manager & Trading Strategist at The Streets.

All 13 sectoral indices showed positive movement, with Nifty IT standing out by gaining over 2%, making it the top performer. Leading the gains in Nifty IT were Infosys, Wipro, and Tech Mahindra, which saw their stocks rise between 2% and 4%.

Meanwhile, Kotak Mahindra, IndusInd Bank, and SBI Life were the major laggards in the Nifty 50, each experiencing declines of 0.5% to 1.0%.

In the broader market, the BSE Midcap rose 0.2% and BSE Smallcap rose 0.6%. "Midcaps have a lot of room for upside. It might not be an immediate rally, but we could see a slow and steady rise over the next month. It will be a very selective move," added Rambhia.

Despite Domestic Institutional Investors (DIIs) absorbing the Foreign Institutional Investors (FIIs) selling pressure on Indian equities, the stretched valuations of the domestic market remain a concern, market experts said. "If Nifty 50 falls to the levels it did on election outcome day (June 4) and consolidates at those levels for a month or two, we will be more comfortable," Rambhia said.

Investors are also awaiting the ministry allocations set to take place over the weekend. While some believe that the BJP's majority influence will make ministry allocations a non-issue, Gaurang Shah of Geojit Financial Services highlighted that the demands from alliance partners could make the markets uneasy. "We'll have more clarity on June 9. After that, the market will start focusing on the monsoon, Q1 FY25 earnings, GDP growth, GST collection, and flows," Shah said.

Additionally, investors are keenly awaiting the release of the US's weekly jobless claims report, expected today. This data could indicate a softening in the labor market, which might lead the US Federal Reserve to consider cutting interest rates.

The RBI is widely expected to maintain current interest rates and continue its tight monetary policy.

Financial stocks experienced a slight increase of 0.11%, and banking stocks rose by 0.14%. IT stocks saw a significant surge of 2.1%, fueled by anticipation of the US non-farm payrolls report, which is expected later today. This report could influence US interest rate trends, a crucial factor for IT companies.