MARKET WRAP: Indices end flat even as RBI cuts repo rate by 25 bps to 6.25%

All that happened in markets today

3:57 PM

MARKET COMMENT :: Vinod Nair, Head of Research, Geojit Financial Services

Market turned volatile after the announcement of RBIs monetary policy as investors started booking profit from the recent rally. Market has gained well in the last one week by 5% while 10,950 – 10,850 will be the immediate support. The change in stance to neutral was in-line with expectation but rate cut was a surprise. Benign inflation outlook and possibility of further ease in key rates will help to revive credit growth which is positive for rate sensitive stocks

3:44 PM

Sectoral gainers and losers of the day on NSE

3:36 PM

Gainers and losers of the day on S&P BSE Sensex

3:34 PM

Market at close

The S&P BSE Sensex ended at 36,971, down 4 points or 0.01 per cent, while the broader Nifty50 index settled at 11,069, up 7 points or 0.06 per cent.

3:16 PM

Nifty Auto index is trading over 2% higher

3:02 PM

Top gainers and losers on S&P BSE Sensex

2:49 PM

Manappuram, Muthoot Finance rally up to 9% post Q3 result, RBI policy

Shares of Manappuram Finance and Muthoot Finance have rallied by up to 9 per cent on Thursday on back of heavy volumes after these companies reported a strong set of numbers for the quarter ended December 2018 (Q3FY19). Manappuram Finance soared 9 per cent to Rs 105 after it reported a 43 per cent year-on-year (YoY) growth in consolidated net profit at Rs 245 crore for December 2018 quarter (Q3FY19). The non-banking housing finance company (NBFC) had a profit of Rs 171 crore in a year ago quarter. READ MORE
 

2:29 PM

RBI's new market-friendly policy indicates there could be more cuts ahead

The decision to lower rates by 25 basis points (bps) does come as a surprise though the change in stance was on expected lines. Quite clearly, the Reserve Bank of India (RBI) and the Monetary Policy Committee (MPC) have decided to provide the final push to demand at the end of the fiscal by lowering rates. As four members have voted in favour, this is quite significant as it does indicate that this stance will continue in the new fiscal as well. READ MORE

 

2:15 PM

COMMENT ON RBI POLICY: RK Gurumurthy, Head – Treasury, Lakshmi Vilas Bank

Repo rate cut will feed into key benchmark rates and the new lending norms for retail borrowers that becomes operational from 1st April 2019. This will boost retail demand for both housing and auto loans, which are in a majority of the cases priced on a floater basis. FPI limits for corporate bonds have been increased and External Borrowing conditionalities have been relaxed. This should serve to address to some extent the current funding distress faced by some of the NBFCs.

2:01 PM

COMMENT ON RBI POLICY: Shishir Baijal, Chairman & Managing Director, Knight Frank

The reduction in Repo and Reverse Repo rates by the RBI by 25 bps is a welcome move, which we hope will provide a further fillip to the demand side for real estate. As a result of this reduction, we hope that banks will pass on the benefits of the revised rates to the end consumer of loans, thereby making it easier for them to make their purchase decision. For a sector which has been suffering from poor end user demand for some time now, this is a step in the right direction.

1:59 PM

Piyush Goyal on RBI rate cut

1:53 PM

NEWS ALERT

Adani Enterpries Q3 net profit at Rs 92.25 crore vs Rs 172.03 crores on QoQ 

1:43 PM

ADAG stocks continue to fall; RInfra, RCom tank over 50% in four days

Shares of Anil Dhirubhai Ambani Group (ADAG) companies are under pressure yet again today. Reliance Infrastructure (RInfra), Reliance Communications (RCom) and Reliance Power (RPower) have lost over 50 per cent in past four trading days on the BSE.

 

Reliance Capital, Reliance Home Finance and Reliance Naval and Engineering (R-Naval) were down between 33 per cent and 35 per cent. Reliance Nippon Life Asset Management, however, bucked the trend and gained 12 per cent during the period. In comparison, the S&P BSE Sensex has moved up 1.7 per cent thus far in the week. READ MORE

1:41 PM

Nomura on RBI Policy outcome

The MPC’s U-turn – from ‘calibrated tightening’ in December (which effectively rules out a rate cut) to a decision to cut rates in February – is a surprise. We expected a rate cut later this year, but the front-ended delivery was a surprise, even relative to our expectations. The RBI has seen through the expansionary budget, as well as sticky core inflation, and viewed the recent softness in inflation prints as “open[ing] up space for policy action”.

On growth, the RBI continues to sound optimistic, in contrast to our assessment that weak global growth, the lagged impact of tighter financial conditions and domestic political uncertainty will trigger a cyclical slowdown. Interestingly, the MPC also notes that “actual output has inched lower than potential”. We are reviewing our call on the policy rate trajectory, but the governor’s statement that “there is room to act” clearly suggests this is not a one and done cut

1:32 PM

Top gainers on BSE500

COMPANY	PRICE(rupees)	CHG(rupees)	CHG(%)	VOLUME
ASTRAZENECA PHAR	1773.45	167.35	10.42	15031
VODAFONE IDEA	32.50	2.70	9.06	3079269
CG POWER & INDU.	35.40	2.90	8.92	931865
BOMBAY DYEING	112.80	8.80	8.46	684227
MEGHMANI ORGAN.	48.25	3.55	7.94	154496

1:15 PM

Reserve Bank turns dovish, cuts repo rate to 6.25%: Key takeaways

The Reserve Bank of India (RBI) in its first policy meet under the new RBI chief Shaktikanta Das, decided to cut the repo rate by 25 basis points (bps) or 0.25 per cent to 6.25 per cent on Thursday. In line with expectations, the monetary policy committee (MPC) members also unanimously voted to change the policy stance to neutral whereas rate cut was voted 4-2. RBI Deputy Governor, Viral Acharya voted to keep the interest rates unchanged.

 

Gaurav Dua, Head of Research at Sharekhan by BNP Paribas, said the change in stance to “Neutral” and dovish commentary open doors for further rate cuts going ahead. The monetary policy support along with the fiscal stimuli of one trillion rupee in the Union Budget comes as a booster dose for the economy. READ MORE

RBI Governor Shaktikanta Das Interacting with media persons during the Press Conference at Reserve Bank of India in New Delhi on Monday | Photo-Dalip Kumar

1:06 PM

COMMENT ON RBI POLICY :: VK Vijaykumar, Chief Investment Strategist, Geojit Financial Services

The unusual turnaround in RBI’s monetary policy from calibrated tightening to rate cut stems from the benign inflation, both current and expected. Since the RBI doesn’t expect the headline inflation to cross 4 percent in CY2019, one can realistically expect one more rate cut this calendar year. It appears that since the RBI believes that the "pathway of inflation has moved down substantially” the central bank is shifting its immediate  goal to stimulating the economy with rate cuts. This is appropriate in the context of the slowing investment in the economy and since crude can be expected to remain soft in the context of the global growth and trade slowdown. 
 

The rate cut is good news from the capital market perspective since it can reinforce the resilience seen in the key bench mark indices.

12:57 PM

COMMENT ON RBI POLICY :: Dhiraj Relli, MD & CEO, HDFC Securities

The RBI MPC has delighted market participants by changing stance to neutral and cutting repo rate by 25 bps. Q3FY20 inflation expectation cut to 3.9% means some more rate cuts can be expected in the course of the next few meetings. While Bond yields are yet to respond to the rate cut, we think they may start to fall materially when FPIs revise their short term view on India (overcoming their fears on fiscal situation). Equity markets could rise some more, welcoming an attempt to address recent issues in the credit markets, ultimately leading to higher growth

12:55 PM

MARKET CHECK

12:54 PM

RBI policy outcome: Nifty Bank down 0.23%

12:51 PM

RBI policy outcome: Nifty Auto up 1.5%

12:44 PM

RBI MPC cuts Q4 retail inflation forecast to 2.8%, thanks to benign monsoon

The Reserve Bank of India Thursday revised downwards the retail inflation forecast to 2.8 per cent for the last quarter of the current fiscal on account of favourable factors including benign monsoon.

 

The RBI in its last bi-monthly monetary policy announcement for the current fiscal also lowered the retail inflation forecast for the first half of next fiscal beginning April, to 3.2-3.4 per. For the third quarter of 2019-20, the inflation target is set at 3.9 per cent. READ MORE

12:30 PM

COMMENT ON RBI POLICY :: Rajni Thakur, economist, RBL Bank

MPC has clearly responded to the slack in financial markets in its credit policy. As the political cycle intensifies, monetary authorities have the onus to ensure financial sector stability and RBI seems to be focussed on it in deciding to cut the rates and complimenting it with other announcements regarding NBFCs credit assessment, raising limits for FPI for CP investments etc.

There was a space created by lower headline inflation and RBI has used that space to support financial activities. With lower projections of inflation and growth going forward, there are all indications that MPC will look for opportunities to cut further in the cycle if space is available

12:28 PM

COMMENT ON RBI POLICY :: Anuj Puri, chairman, ANAROCK Property Consultants

RBI’s decision to slash the repo rate by 25 basis point to 6.25 % is a welcome and unexpectedly positive move, given the sops that the recent expansionary budget gave to farmers at an additional cost of Rs 75,000 crore per annum. It was also overdue, as this has been the first cut in a long time. It definitely augurs well for the real estate sector which also received a budget bonanza in the previous week. 

 

However, the real estate market does not depend only on marginally improved buyer sentiment - there are larger issues that hold the sector hostage right now. The liquidity issues post the NBFC crisis are a bigger concern. NBFCs and HFCs have seriously curtailed disbursements to developers. Moreover, the repayment capabilities of many developers are also in question

 

12:28 PM

RBI policy: Bankrupt companies can repay debt using foreign borrowings

In its bi-monthly monetary policy review on Thursday, the Reserve Bank of India (RBI) said companies under the insolvency process can borrow abroad to repay the existing lenders. However, such companies can't use this relaxation to borrow from overseas branches/subsidiaries of Indian banks. READ MORE

12:23 PM

COMMENT ON RBI POLICY :: Gaurav Dua, Head of Research, Sharekhan by BNP Paribas

The Reserve Bank of India comes up with unexpected cut in the policy rates given the benign outlook on inflation. What’s  more, the change in stance to “Neutral” and dovish commentary also opens doors for further rate cuts going ahead. The monetary policy support along with the fiscal stimuli of one trillion rupee in the Union Budget comes as a booster dose for the economy. The coordinated policy efforts is extremely supportive for consumption demand and equities in general. We expect non banking finance companies and consumer demand led companies to immensely benefit from the policy action

12:21 PM

RBI Governor says

System liquidity position in surplus in Feburary

12:16 PM

RBI Governor says

Will ensure there is no liquidity scarcity

12:15 PM

Shaktikanta Das says

Need to strengthen private investment activity

12:13 PM

NEWS ALERT

Farm output expected to decelerate in FY19