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NIFTY analysis with experts, RBI policy review, Indian markets fall as BEARS took charge…. Market updates for 05/12/18

PurpleTrades - stock market courses > News > NIFTY analysis with experts, RBI policy review, Indian markets fall as BEARS took charge…. Market updates for 05/12/18

Report by- Sabyasachi Bhattacharya


RBI policy review; decides to hold interest rates and monetary policy stance –

Maintaining growth forecast while at the same time informing the markets that the central bank will not shy away from buying bonds has restored confidence in the bond markets. Bond markets reacted positively to the development despite the fact that RBI has said that SLR will be reduced on a quarterly basis by 25 basis points. Stock markets, however, fell in line with global markets but Bank Nifty after an initial drop rebounded. Here are the 10 key takeaways for the monetary policy:

  • In a move to increase transparency, RBI has asked lenders to link all new floating rate loans to external benchmarks. The biggest benefit of this will be to the consumer as monetary transmission will be faster. The move is, however, negative for banks who have been absorbing the interest rate cuts by the central bank in order to cushion their bottomline to manage their non-performing assets.
  • Retail inflation, as measured by CPI declined from 3.7 percent in September to 3.3 percent in October. Food prices moving into deflation coupled with low oil prices helped lower in keeping inflation low.
  • Gross domestic product (GDP) growth slowed down to 7.1 percent in the second quarter of the current fiscal after four consecutive quarters of acceleration. This was mainly on account of slowing private consumption and a sharp drop in net exports.
  • More worrying for the government and the economy is the rural growth which has decelerated. Subdued growth in kharif output along with depressed prices of agricultural commodities and sluggish growth in rural wages are all signs of distress in the rural economy. Negative tractor sales growth and two-wheeler sales are both highlighting the stress.
  • Growth in manufacturing decelerated due to lower profitability of manufacturing firms on account of a rise in input costs. Mining and quarrying turned negative, caused by a contraction in output of crude oil and natural gas.
  • The RBI has to be credited for managing liquidity in the economy and restoring confidence after the IL&FS fiasco. In a post-policy conference the RBI team pointed out that it may expand the pace of bond purchases. Deputy Governor Viral Acharya said that RBI intends to conduct additional long-term repo operations to meet transient liquidity demand arising from the third tranche of advance tax outgo.
  • The central bank continues to maintain a hawkish stance on inflation — food prices may increase as Rabi crop sowing is below long-term normal by 8.3 percent. Assuming a normal monsoon for 2019, RBI has projected inflation at 2.7-3.2 percent in the second half of this fiscal.
  • Slower global growth has rubbed off on commodity prices. Crude oil prices have declined sharply, base metal prices have continued to decline on selling pressure following weak demand from major economies. But the gold price has risen mainly on account of funds looking for a safe parking place.

Source- MoneyControl, Purple Trades Research Department   



Indian Indices fall as BEARS took charge of the market-

Chart source- ChartInk

Indian markets had a negative day today. As you can see on the chart Nifty had a GAP-DOWN opening today after which the first candle was an open equals to high candle which pushed the prices down further. The Index was not able to break the resistance at 10,800 and further moved below to close up with a loss of 86 points approximately. Due to the last half hour buying seen in the Index it moved upwards. At the end of the day it was a negative close for the market for second consecutive session as investors reacted to the stance on interest rates by the Reserve Bank of India. The Monetary Policy Committee (MPC) kept interest rates unchanged, but sharply cut the inflation targets for October-March. However, equity benchmarks are off their low points as the Sensex had cracked over 300 points, while the Nifty tested 10,750-mark. Selling was visible across all major sectors, with automobiles, banks, consumption, infrastructure, metals and pharma ending in the red. The Nifty Midcap was down over a percent. At the close of market hours, the Sensex was down 249.90 points or 0.69% at 35884.41, while the Nifty was lower by 80.20 points or 0.74% at 10789.30. The market breadth was negative as 799 shares advanced, against a decline of 1,744 shares, while 145 shares were unchanged. HUL and HDFC were the top gainers, while Sun Pharma, Tata Steel, and Hindalco lost the most.




Let’s take a look at the performance of major Indices-

Global markets moved downwards as all of the Indices were down, NASDAQ was seen in the RED along with FTSE, DAX, CAC. Asian Markets were also in the RED as NIKKEI and Hang Seng were seen in the RED.

Source- MoneyControl, Purple Trades Research Department   


Key Points for Traders to watch out for while trading Nifty tomorrow-

  • 10,750 is a short term support for Nifty.
  • If Nifty breaks 10,750 then it has the potential to go down.
  • 10,810 is a short term resistance for Nifty.
  • If Nifty breaks 10,810 then it has the potential to go up.



Top sectors that moved the market today-                            Data source- Moneycontrol



Top Gainers for today-                                                                                        Data source- Moneycontrol



Top losers for today-                                                               Data source- Moneycontrol


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