All eyes are on the Reserve Bank of India (RBI) policy meet scheduled later in the day wherein market experts expect the Central Bank to maintain a neutral stance.
The Indian equity market opened on a strong note on Thursday morning taking cues from global markets which ended on a robust note last evening. The Nifty jumped 127 points at 10,256 mark while the Sensex was up 373 points or 1.13 percent.
Nifty metal index out shined the other indices and was trading up by 2.34 percent led by Hindalco Industries which jumped 4 percent while Welspun Corp was up 3 percent followed by Tata Steel, SAIL, Jindal Steel & Power and JSW Steel.
Ahead of the MPC meet, Bank Nifty was trading higher by 1.12 percent led by Bank of Baroda, Bank of India and Canara Bank, each adding over 2 percent. These were followed by State Bank of India, Yes Bank and ICICI Bank.
According to Lakshmi Iyer, CIO- Debt & Head of Products at Kotak Mutual Fund, “The upcoming MPC meeting holds significance in terms of the guidance the RBI has to offer. General market view is that of an extended pause. Market would also want to see the MPCs reaction to the recent axe in government borrowing program and its view on the fisc thereoff.
“Though our view is that of status quo, it would be interesting to see the MPCs accompanying stance in the light of moderation in CPI domestically and its reaction to the recent global developments.”
The top Nifty gainers included Hindalco Industries which jumped 4 percent followed by Indiabulls Housing Finance which added 3 percent while Vedanta, UPL and Tata Motors were the other gainers.
The most active Nifty stocks included Tata Steel and Tata Motors which gained 2.7 percent while Graphite India, Bandhan Bank and ICICI Bank were the other active stocks.
The top BSE gainers included Indiabulls Ventures which jumped close to 12 percent while Future Lifestyle was up close to 5 percent. Sterlite Tech, Jindal Steel & Power and Deepak Fertilizer were the other gainers.
Apollo Tyres, Interglobe Aviation, MRF, NELCO and Nestle India were some of the Nifty stocks which hit fresh 52-week high in today’s trade while Gitanjali Gems hit new 52-week low.
The market breadth was in favour of the advances with 1435 stocks advancing while 184 declined and 401 remained unchanged. On the other hand, in the BSE, 1695 stocks advanced and 293 declined and 50 remained unchanged.
Global research firm, Morgan Stanley is of the view that with growth tracking in line and inflation tracking slightly below the RBI’s projections, it does not expect any changes to policy rates and stance at the upcoming meeting. Confidence on the growth outlook (and its impact on inflation) will be key to assess how the MPC’s stance will evolve thereafter.
Considering that the growth and inflation backdrop relative to the MPC’sassessment, the house expects the MPC to remain on hold and maintain its neutral stance. The vote for status quo would also likely be maintained at 5-1, with Dr Patra likely to reiterate his case for a 25bps rate hike, it added.
With no fresh new concerns over the inflation dynamic and with the recovery remaining in a nascent stage, we believe that the MPC will find merit in not takingup rate hikes at the upcoming meeting.
As regards the inflation outlook, the incoming data and our current assessment is that there are limited new upside risks arising from supply side drivers (relative to the last MPC meeting) while at the same time, demand pull pressures have not emerged in a meaningful manner considering the early stages of recovery. In this context, we believe that there is still time for the MPC to pause and assess more incoming data.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India’s leading expert on wealth building, has created a strategy which makes it possible… in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.
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