HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Indian equity markets likely to make positive start on Friday
Dec-06-2019

Indian equity markets witnessed volatile session and ended lower on Thursday after Reserve Bank of India (RBI) kept its repo rate unchanged at 5.15% with accommodative stance. Today, the start is likely to be good on positive global cues and traders will be drawing encouragement with Reserve Bank of India (RBI) Governor Shaktikanta Das indicating that the government may come up with some countercyclical policy measures on the fiscal side to revive growth which may be another reason why the Monetary Policy Committee did not vote for a policy rate cut despite popular expectation. Support may also come with Commerce and Industry Minister Piyush Goyal’s statement the target of Rs 5 lakh crore business through government’s e-marketplace GeM is achievable in less than five years given the huge amount of procurement done via the platform. Meanwhile, Assocham President B K Goenka said a temporary pause by the RBI to the policy interest rate reduction cycle while keeping its stance accommodative is understandable as long as it keeps nudging the banks to significantly pass the benefits of earlier rate combined repo rate cuts of 135 basis points since February this year. However, expressing disappointment at the RBI’s decision to keep interest rates unchanged, industry body Ficci said there is a need for continued action on the policy rate front to boost growth. Banking stocks will be in action with Fitch Ratings stating that Indian banks are likely to take significantly more loan write-offs to reduce bad loans against a backdrop of rising provisions and weak recovery prospects. The state-owned banks account for around 90 per cent of impaired loan stock, and have cumulatively written off nearly $30 billion in bad loans in the past three years. There will be buzz in aviation stocks with the International Air Transport Association (IATA) stating that India’s domestic air passenger traffic grew 3.6 per cent in October 2019 but the expansion was slower than last year, reflecting general economic slowdown and disruptive impact of Jet Airways’ collapse. There will be some reaction in information technology (IT) stocks with report that Finance Minister Nirmala Sitharman said the lower 15 per cent tax rate for new manufacturing companies will not apply to computer software development, mining and printing of books.

The US stocks closed higher for a second consecutive session Thursday as investors remained optimistic about prospects for a US-China trade deal. Asian markets are trading in green in early deals on Friday as US President Donald Trump’s rhetoric kept investors’ hopes up on a trade deal with China.

Back home, Indian equity benchmarks moved in a see-saw manner for some part of the day and ended Thursday’s session marginally in red, following the outcome of the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) meeting where the central bank kept the repo rate unchanged. Markets started off with marginal gains, as traders took some support with the Union Cabinet approving 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. Finance Minister Nirmala Sitharaman has said that with the creation and launch of umbrella ETF the government hopes to diversify investor base. She emphasised that this is expected to eventually increase the size of bond ETFs in India, leading to achieving key objectives at a larger scale. However, key indices erased all gains and turned volatile in afternoon session, after RBI raised its inflation projection to 5.1-4.7 percent for the second half of the current fiscal on the back of a spike in prices of vegetables such as onion and tomatoes. RBI also sharply lowered GDP growth forecast for the current financial year to 5 percent from the earlier estimate of 6.1 percent on account weak domestic and external demand. Anxiety also spread among traders with Union Minister Nitin Gadkari expressing regret over hurdles like land acquisition and environment clearance faced by various road projects, saying the country must have a positive approach towards development. The market participants failed to take support with Reserve Bank Governor Shaktikanta Das’ statement that there is good coordination between the fiscal and monetary policies so far, in addressing growth concerns and that the central bank is not worried about government missing fiscal deficit target. Finally, the BSE Sensex lost 70.70 points or 0.17% to 40,779.59, while the CNX Nifty was down by 24.80 points or 0.21% to 12,018.40.
  RELATED NEWS >>
Most Viewed >>
April 19 , 2024
Gold mutual funds deliver 23% return in 6 mont
April 19 , 2024
Is it time to take small bets in FMCG stocks?
April 19 , 2024
FPIs pull out of debt, selling pressure may co
April 19 , 2024
Axis AMC elevates R Sivakumar as head of the c
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.