HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Markets to get cautious start ahead of RBI’s policy meet outcome
Dec-05-2019

Indian markets ended volatile session in green territory mainly on the back of fag-end recovery driven by gains in banking and IT stocks amid India's services sector activity recovering in November. Today, the markets are likely to make a cautious start amid rise in crude oil prices and ahead of the Reserve Bank of India’s (RBI) policy meeting outcome. There is expectation of a 25 bps rate cut by the central bank to support growth and revive investment cycle. There will be some cautiousness with the World Bank’s statement that India faces twin threats to its income from global trade which makes up 48 per cent of India’s GDP - rise of protectionism and trade wars and technological change. The World Bank believes that as much as 1 per cent of India’s GDP could be shaved off by ongoing trade wars. However, traders may take note of report that the GST Council meeting scheduled to be held on December 18 is likely to deliberate on raising cess on some more products to meet the growing need of compensation among other issues. Meanwhile, the Union Cabinet approved the launch of an exchange-traded fund (ETF) for bonds to create an additional source of funding for Central Public Sector Enterprises (CPSEs) and state-owned financial institutions. The New Fund Offer (NFO) of this ETF is expected to be launched during December itself. There will be some buzz in the PSU stocks with a private report that the government will recommend loss-making PSUs identified for strategic stake sale for closure and will not wait endlessly and won’t make repeated attempts to get a bidder. Infra stocks will be in focus with Union Minister Rao Inderjit Singh’s statement that as per the flash report of July, 2019, a total of 355 projects are showing cost overrun and the overall cost overruns is Rs 3.88 trillion. There will be some reaction on power stocks with report that the power distribution companies in the states owe Rs 67,245 crore as overdue to power generating companies at the end of October 2019.

The US markets ended higher on Wednesday amid a report that a phase-one trade US-China trade deal was still in the works. Asian markets are trading mostly in green on Thursday on signs the United States and China were on track for a preliminary trade deal.

Back home, Indian equity benchmarks staged sharp recovery to end Wednesday’s trading session in green terrain. After a negative start, indices altered between green and red terrain, amid a private report that India’s GDP growth estimate to 5.3% from 6% amid a rash of similar actions, especially after the September quarter growth slowed to a 26-quarter low of 4.5%. In noon deals, losses got extended, even though India’s services sector activity returned to growth in the month of November. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index bounced back to 52.7 in November from 49.2 in October. However, indices managed to come back in green terrain in the last hour of the trade. Sentiments got relief, after Commerce Minister Piyush Goyal said that the FDI inflow into India has increased in the last fiscal in comparison to previous years with $62 billion foreign investments in 2018-19. In 2017-18, the total FDI inflow was $60.97 billion. Adding more comfort, India ranked 73rd out of 152 countries in the United Nations Conference on Trade and Development’s Business-to-Consumer (B2C) E-commerce Index 2019 that measures an economy’s preparedness to support online shopping, moving seven places up in the list. Finally, the BSE Sensex gained 174.84 points or 0.43% to 40,850.29, while the CNX Nifty was up by 49.00 points or 0.41% to 12,043.20.

  RELATED NEWS >>