Sensex, Nifty open marginally higher; Godrej shares rise after split in conglomerate

Indian stock indices maintained their upward trajectory on Thursday morning, rising marginally after witnessing mild losses in the previous session. The positive momentum could be attributed to the record Goods and Services Tax (GST) collection in April, coupled with overall stability in the economy.

At 9.33 am, the Sensex and Nifty were 0.1-0.2 percent higher each, with most sectoral indices trading in the green. The stock exchanges were closed on Wednesday on account of Maharashtra Day, with the next market holiday scheduled for May 20 due to General Elections.

On Tuesday, the stock indices settled marginally lower, snapping morning gains that were supported by strong U.S. markets and improved investor sentiment amid the relative easing of tensions in West Asia.

Volatility has returned to Indian stock markets after a smooth rally at the start of April, primarily driven by Foreign Portfolio Investor selling activity. Foreign portfolio investors (FPIs) have turned net sellers in Indian stocks lately, likely due to the ongoing geopolitical crisis in the Middle East, prompting investors to take money off their portfolios. Domestic Institutional Investors, however, are offsetting the selling by FPIs.

Meanwhile, the U.S. Federal Reserve, during its latest monetary policy meeting, voted to leave the key interest rate unchanged at 5.25-5.50 percent, keeping the policy rate unchanged for the sixth straight time. The Fed stated that it was prepared to maintain the current interest rate for “as long as appropriate” to align the inflation rate with its 2 percent target. Elevated interest rates are a monetary policy instrument typically used to suppress demand in the economy, thereby helping to lower the inflation rate.

The shares of Kotak Mahindra Bank dropped 4% to become the top loser in the Nifty Bank index after the private lender said its joint managing director KVS Manian resigned after just two months in the role. The bank index was mostly flat.

The Nifty IT index fell 0.2% after the US Federal Reserve flagged disappointing inflation readings that could delay interest rate cuts. Higher rates have weighed on the IT sector by resulting in lower client spending in the key US market. Coforge led the losses, down 0.5%.

In contrast, the Nifty Energy index gained 0.4% and the Nifty Oil and Gas index inched up 0.1%, benefiting from a fall in global oil prices overnight to a near seven-week low. This is seen as a positive for inflation expectations in India, the world’s third-largest oil importer and consumer. Bharat Petroleum and Power Grid Corp gained 2.2% and 3.3% respectively.

Four out of the five Godrej Group-listed companies are trading in the green. The only Group company that fell at the time of filing this report was Godrej Properties. This week, the founding family of the 127-year-old Godrej Group, which operates across various sectors including locks, soaps, aerospace, and real estate, reached an agreement to split the conglomerate.