AS EXPECTED, THE RBI KEPT THE POLICY RATE UNCHANGED AND MAINTAINED THE POLICY STANCE “ACCOMMODATIVE”. GDP GROWTH ESTIMATES FOR FY21 IS PROJECTED AT 6%; IN THE RANGE OF 5.5– 6% IN H1 FY-21 & 6.2% FOR Q3 FY-21
Monetary Policy: RBI maintains status quo and keeps the policy rate and stance unchanged as expected, given near term concerns about inflation.
RBI's Monetary Policy Committee in its last credit policy for FY21 decided to keep interest rates unchanged, thereby extending a pause in its current rate-easing cycle. All MPC members voted in favour of the status quo decision.
MPC also decided to continue with the ‘accommodative’ stance as long as it is necessary to revive growth.
MPC stated that there is policy space for rate cuts in the future. However, the outlook for near-term inflation remains uncertain at this juncture and economic activity continues to remains subdued.
RBI maintained that some of the high-frequency indicators have shown green shoots of economic recovery. However, it would like to wait for more incoming data to gauge the sustainability of the recovery.
MPC estimates India’s GDP to grow at 6% in FY21. With a range of 5.5 to 6.0% in the first half of FY-21 and 6.2% for Q3 FY-21.
Key highlights of the policy
MPC revised its CPI inflation projection upwards to 6.5% for Q4 FY-20 and 5.45% for the first half of FY-21. It also revised the projection for Q3 FY-21 to 3.2%, with risks broadly balanced.
RBI, in an attempt to speed up credit flows, announced that banks will be given a Cash Reserve Ratio (CRR) relief on incremental auto loans, retail housing loans and all micro, small and medium enterprise loans. Relief on CRR will be applicable on loans given between 30th Jan’20 and 31st July’20
RBI has extended the one-time restructuring scheme for loans to MSMEs till 31st Dec’20. GST registered companies whose MSME accounts are in default as on 1st Jan’20 will be eligible for the one-time restructuring. The recast scheme was initially announced in January last year.
Commercial real estate sector: RBI has decided to extend the restructuring of project loans by a year. It will permit restructuring of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by another one year without downgrading the asset classification.
View:
RBI’s decision was not surprising given the current growth-inflation dynamics, as the economic activity continues to be subdued and near-term outlook on inflation remains uncertain. We expect RBI to be on pause for a longer time (till Q2FY21); however, there might be space for future monetary policy action once inflationary pressure ebbs.
Debt markets were expecting a status quo on the policy rate but MPC’s progrowth comments have improved the market sentiment. Yields on the 10-year benchmark G-Sec fell by ~4 bps at 6.47% (one-month low) after the monetary policy announcement.
We recommend investment in high-quality AAA oriented short-term and banking & PSU debt funds. Fresh investment in the short to medium term is recommended with a 2 to 3 year investment horizon.
Disclaimer: This document is STRICTLY for authorized recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the recipients based on this document. The recipients may take their decisions based on their own judgement and independent advice that they may receive before making any investment or disinvestment decisions. The recipients are advised not to take any decision only on the basis of this document. No portion of this document should be printed, reprinted, redistributed, reproduced, duplicated or sold.
RBI Monetary Policy Updates: Repo Rate kept Unchanged
AS EXPECTED, THE RBI KEPT THE POLICY RATE UNCHANGED AND MAINTAINED THE POLICY STANCE “ACCOMMODATIVE”. GDP GROWTH ESTIMATES FOR FY21 IS PROJECTED AT 6%; IN THE RANGE OF 5.5– 6% IN H1 FY-21 & 6.2% FOR Q3 FY-21
Monetary Policy: RBI maintains status quo and keeps the policy rate and stance unchanged as expected, given near term concerns about inflation.
RBI's Monetary Policy Committee in its last credit policy for FY21 decided to keep interest rates unchanged, thereby extending a pause in its current rate-easing cycle. All MPC members voted in favour of the status quo decision.
MPC also decided to continue with the ‘accommodative’ stance as long as it is necessary to revive growth.
MPC stated that there is policy space for rate cuts in the future. However, the outlook for near-term inflation remains uncertain at this juncture and economic activity continues to remains subdued.
RBI maintained that some of the high-frequency indicators have shown green shoots of economic recovery. However, it would like to wait for more incoming data to gauge the sustainability of the recovery.
MPC estimates India’s GDP to grow at 6% in FY21. With a range of 5.5 to 6.0% in the first half of FY-21 and 6.2% for Q3 FY-21.
Key highlights of the policy
MPC revised its CPI inflation projection upwards to 6.5% for Q4 FY-20 and 5.45% for the first half of FY-21. It also revised the projection for Q3 FY-21 to 3.2%, with risks broadly balanced.
RBI, in an attempt to speed up credit flows, announced that banks will be given a Cash Reserve Ratio (CRR) relief on incremental auto loans, retail housing loans and all micro, small and medium enterprise loans. Relief on CRR will be applicable on loans given between 30th Jan’20 and 31st July’20
RBI has extended the one-time restructuring scheme for loans to MSMEs till 31st Dec’20. GST registered companies whose MSME accounts are in default as on 1st Jan’20 will be eligible for the one-time restructuring. The recast scheme was initially announced in January last year.
Commercial real estate sector: RBI has decided to extend the restructuring of project loans by a year. It will permit restructuring of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by another one year without downgrading the asset classification.
View:
RBI’s decision was not surprising given the current growth-inflation dynamics, as the economic activity continues to be subdued and near-term outlook on inflation remains uncertain. We expect RBI to be on pause for a longer time (till Q2FY21); however, there might be space for future monetary policy action once inflationary pressure ebbs.
Debt markets were expecting a status quo on the policy rate but MPC’s progrowth comments have improved the market sentiment. Yields on the 10-year benchmark G-Sec fell by ~4 bps at 6.47% (one-month low) after the monetary policy announcement.
We recommend investment in high-quality AAA oriented short-term and banking & PSU debt funds. Fresh investment in the short to medium term is recommended with a 2 to 3 year investment horizon.
Disclaimer: This document is STRICTLY for authorized recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the
recipients based on this document. The recipients may take their decisions based on their own judgement and independent advice that they may receive before making any investment or disinvestment decisions. The recipients are advised not to take any decision only on the basis of this document. No portion of this document should be printed, reprinted, redistributed, reproduced, duplicated or sold.
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1st Week of February 2020 - Weekly BSE Gainers, NSE Gainers & Losers Stock Market Report
Indian Markets Recap Indian Indices (% Change) INDEX Close 1D 5D 1M 3M NIFTY 11,962 -0.62 -2.3 -2.2 0.6 BSE500 15,650 -0.62 -2.3 -0.8 1.6 SENSEX 40,723 -0.47 -2.1 -1.8 1.4 MID CAP 100 18,010 -0.66 -1.9 4.2 6.7 NSE SMALL CAP 100 6,226 -0.01 -1.9 4.5 7.5 Source: Company, IndiaNivesh Research Global Markets Global Markets (% Change) INDEX Close 1D 5D 1M 3M DJIA 28,256 -2.09 -2.5 -1.3 3.3 NASDAQ 9,151 -1.59 -1.8 1.4 9.1 FTSE 7,286 -1.30 -4.0 -4.4 -0.2 Nikkie 23,205 0.99 -2.6 -1.9 1.6 Hangseng 26,313 -0.52 -7.2 -7.5 -2.9 Source: Company, IndiaNivesh Research Nifty Outlook (SELL on RISE) Bank Nifty Outlook US 10 Year Bond Yield INDIA 10 Year Bond Yield Sectoral Movement INDEX Close 1D 5D 1M 3M Banking 30,834 0.6 -1.3 -3.9 1.7 IT 16,144 -1.13 -1.99 1.3 4.3 Pharma 8,139 -1.20 -1.87 0.3 2.4 Fin Services 14,317 0.2 -0.7 -1.7 5.4 Media 1,835 -0.5 -2.9 4.2 -4.7 NIFTY PSU BANK 2,366 0.8 -3.3 -6.3 -6.9 Auto 8,087 -1.16 -2.28 -1.0 -3.7 FMCG 30,775 -0.52 -2.22 2.2 -5.2 Real Estate 331 1.2 0.7 10.5 22.1 Metals 2,569 -2.3 -8.1 -9.8 0.3 NIFTY PVT BANK 16,936 0.4 -1.5 -4.5 1.2 Source: Bloomberg Sectoral Recap / Lines on performance Sectoral Outlook FII Activity: Derivatives and Cash Market (Weekly) Derivative View LONG BUILT UP SYMBOL Close Price change % OI OI Change % NIFTYIT 16211 0.59% 5400 3.85% INFY 782.55 0.32% 26564400 2.51% NESTLEIND 15545.35 0.66% 445800 0.68% DIVISLAB 1986.7 1.31% 1579200 0.61% HINDUNILVR 2078.75 1.61% 9556200 0.28% Source: Company, IndiaNivesh Research SHORT BUILT UP SYMBOL Close Price change % OI OI Change % BANKNIFTY 29873.4 -3.44% 1445200 33.85% NIFTY 11654.9 -2.83% 14718750 22.06% COALINDIA 167.7 -6.39% 64662300 19.83% ICICIPRULI 452.85 -11.83% 9960000 15.38% ONGC 100 -5.75% 99097000 12.40% Source: Company, IndiaNivesh Research Nifty 50 Pivot SYMBOL Close S2 S1 Pivot R1 R2 ADANIPORTS 362.30 354.03 358.17 364.78 368.92 375.53 ASIANPAINT 1755.35 1702.58 1728.97 1773.38 1799.77 1844.18 AXISBANK 705.45 681.58 693.52 713.93 725.87 746.28 BAJAJ-AUTO 3143.30 3070.43 3106.87 3161.23 3197.67 3252.03 BAJFINANCE 4276.05 4064.75 4170.40 4308.95 4414.60 4553.15 BAJAJFINSV 8947.40 8333.13 8640.27 9127.13 9434.27 9921.13 BPCL 443.50 421.30 432.40 448.40 459.50 475.50 BHARTIARTL 497.20 475.97 486.58 493.92 504.53 511.87 INFRATEL 247.15 235.32 241.23 245.92 251.83 256.52 BRITANNIA 3097.60 2992.53 3045.07 3132.53 3185.07 3272.53 CIPLA 444.20 430.27 437.23 444.72 451.68 459.17 COALINDIA 173.50 164.57 169.03 175.52 179.98 186.47 DRREDDY 3123.05 3076.82 3099.93 3119.97 3143.08 3163.12 EICHERMOT 20059.25 19501.42 19780.33 20189.17 20468.08 20876.92 GAIL 117.70 110.73 114.22 119.08 122.57 127.43 GRASIM 759.40 732.70 746.05 767.90 781.25 803.10 HCLTECH 590.90 572.83 581.87 589.78 598.82 606.73 HDFCBANK 1198.70 1169.57 1184.13 1205.92 1220.48 1242.27 HEROMOTOCO 2446.90 2301.83 2374.37 2452.68 2525.22 2603.53 HINDALCO 184.40 178.63 181.52 185.68 188.57 192.73 HINDUNILVR 2074.90 2001.03 2037.97 2066.98 2103.92 2132.93 HDFC 2268.25 2144.62 2206.43 2314.57 2376.38 2484.52 ICICIBANK 504.60 485.33 494.97 511.48 521.12 537.63 ITC 219.00 200.83 209.92 224.58 233.67 248.33 IOC 108.90 104.03 106.47 110.58 113.02 117.13 INDUSINDBK 1211.10 1155.47 1183.28 1223.02 1250.83 1290.57 INFY 779.50 758.00 768.75 780.00 790.75 802.00 JSWSTEEL 244.75 233.52 239.13 248.22 253.83 262.92 KOTAKBANK 1647.95 1596.42 1622.18 1655.82 1681.58 1715.22 LT 1287.40 1213.33 1250.37 1317.03 1354.07 1420.73 M&M 545.20 499.53 522.37 551.78 574.62 604.03 MARUTI 6812.65 6518.08 6665.37 6887.58 7034.87 7257.08 NTPC 109.30 105.27 107.28 110.07 112.08 114.87 NESTLEIND 15524.75 14979.62 15252.18 15456.97 15729.53 15934.32 ONGC 104.35 98.68 101.52 105.53 108.37 112.38 POWERGRID 182.40 172.20 177.30 182.05 187.15 191.90 RELIANCE 1383.35 1337.95 1360.65 1393.80 1416.50 1449.65 SBIN 302.60 280.83 291.72 307.18 318.07 333.53 SUNPHARMA 422.80 408.53 415.67 426.53 433.67 444.53 TCS 2164.85 2019.28 2092.07 2136.38 2209.17 2253.48 TATAMOTORS 165.60 154.27 159.93 169.37 175.03 184.47 TATASTEEL 53.20 50.23 51.72 53.58 55.07 56.93 TECHM 807.55 748.78 778.17 795.08 824.47 841.38 TITAN 1173.25 1133.22 1153.23 1185.62 1205.63 1238.02 UPL 503.65 476.85 490.25 512.10 525.50 547.35 ULTRACEMCO 4265.25 3988.75 4127.00 4332.95 4471.20 4677.15 VEDL 134.90 130.30 132.60 135.80 138.10 141.30 WIPRO 236.80 231.77 234.28 236.82 239.33 241.87 YESBANK 37.90 35.97 36.93 38.57 39.53 41.17 ZEEL 252.95 239.82 246.38 257.77 264.33 275.72 Source: Company, IndiaNivesh Research Note: The levels for TATASTEEL are of TATASTEEL Partly Paid up ShareDisclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing." )