After opening the day flat, share markets in India witnessed volatile trading activity throughout the day and ended the day on a weak note. Losses were seen across most sectors with stocks in the metals sector and stocks in the PSU sector, leading the losses.
At the closing bell, the BSE Sensex stood lower by 205 points (down 0.6%) and the NSE Nifty closed down by 78 points (down 0.8%). The BSE Mid Cap index ended the day down 0.9%, while the BSE Small Cap index ended the day down by 0.7%.
Asian stock markets too finished in red. As of the most recent closing prices, the Hang Seng was down by 2.2% and the Shanghai Composite was down by 0.3%. The Nikkei 225 was down by 2%. Meanwhile, European markets too were trading in red. The FTSE was 100 down by 0.1%. The DAX was lower by 0.9% while the CAC 40 was down by 0.5%.
The rupee was trading at Rs 64.47 against the US$ in the afternoon session. Oil prices were trading at US$ 57.27 at the time of writing.
The Reserve Bank of India (RBI) kept interest rates unchanged in its monetary policy review today.
The six-member Monetary Policy Committee (MPC) of the RBI kept the repo rate unchanged at 6% in its fifth bi-monthly policy review of the fiscal year.
As per the RBI statement, five of the six MPC members voted in favor of a status quo.
With this, the policy rate stands at a seven-year low. The MPC committee had last cut the repo rate by 25 basis points in August this year.
As for inflation, the RBI expects it to stay in the range of 4.3% to 4.7% on December and March quarters (H2FY18).
The RBI in its statement stated that the GST Council in its last meeting has brought several retail goods and services to lower tax brackets, which should translate into lower retail prices, going forward.
The RBI kept its projections for FY18 real Gross Value Added (GVA) growth at 6.7%, citing that the risks are evenly balanced.
Note that GVA, which excludes product taxes and subsidies, has recovered from 5.6% in June 2017 quarter to 6.1% in September 2017 quarter, as can be seen from the chart below:
Economy on Path to Recovery
What does this rising trend indicate? Here's what we wrote in a recent edition of The 5 Minute WrapUp...
- The uptick is a sign of a pick-up in economic growth engine. But it may still be early days, as the economy continues to grapple with several headwinds. Firstly, a part of the recovery during the September quarter is a one-off effect due to restocking by channel trade with the notebandi impact waning. Although GST is likely to usher in greater transparency and efficiency in the supply-chain network, the initial teething problems are likely to delay the recovery process.
Secondly, with registered growth of a mere 1.2% in the September quarter, exports continue to plateau. This may be due to falling comparative advantage enjoyed by some labor intensive industries in the global markets. Therefore, until these structural issues are resolved, the competitiveness of India's export cannot be fully utilized.
Apart from the above, even private sector investment have remained poor of late. And with government finances already stretched due to farm loan waivers and infrastructure expenditure budgets, there's less fiscal room for further public spending to spur growth.
So, a sustainable recovery will be possible only after the disruptive impact of GST stabilises and other structural issues get resolved.
Bitcoin crossed its US$ 12,000 mark today. The rise came on the back of speculations that the use of futures trading will help digital currencies being viewed as a legitimate asset class.
In the news from the pharma space, Shilpa Medicare share price was witnessing selling pressure today.
Losses were seen after the company reported that it has received form 483 with 10 observations from the United States Food & Drug Administration (USFDA) in relation to SEZ Formulation Facilities situated in Jadcherla, Telangana. The company said total 10 observations were cited during the close-up meeting.
And here's a note from Profit Hunter:
The Bank Nifty traded a bit erratically as Reserve Bank of India (RBI) announced its monetary policy.
Until the policy was announced, the index was trading in a narrow range in a falling channel. But as the RBI rolled out its policy, the index experienced sharp volatility as you can see in the one-minute chart below.
Most of the stocks on the Bank Nifty Index traded on a negative note. Canara Bank (-3%), PNB (-2.60%), and Bank of Baroda (-2.40%) were the top losers.
It broke the channel's support line and fell to a low of 24,908 but recovered immediately to a high of Rs 25,032. However, it found resistance from the channel's resistance line and fell again to a day low of 24,814. Finally, the index ended the session with a loss of 273 points at 24,852 (-1.10%).
Market participants were waiting for RBI policy to dictate the index's next trend. So will the policy bring a change to the index's trend or will the Bank Nifty continue it's down move? Let's keep track of it...
Bank Nifty Traded Volatile Post RBI policy
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