Benchmarks trade with small gains; breadth negative

Key market barometers were trading with small gains in afternoon trade. Shares witnessed steep volatility after RBI's surprise move of keeping the rate unchanged.

At 13:23 IST, the barometer index, the S&P BSE Sensex, was up 60.57 points or 0.12% at 40,898.18. The Nifty 50 index was up 10.80 points or 0.09% at 12,054.

The S&P BSE Mid-Cap index was down 0.10%. The S&P BSE Small-Cap index was up 0.08%.

The market breadth was negative. On the BSE, 1061 shares rose and 1190 shares fell. A total of 183 shares were unchanged. In Nifty 50 index, 19 stocks advanced while 31 stocks declined.

The yield on 10-year benchmark federal paper rose by 1.67% to 6.570 at 13:23 IST compared with 6.462 in the previous trading session.

Buzzing Index:

The Nifty Metal index fell 1.59% to 2,563.

NMDC (down 2.69%), Jindal Steel & Power (down 2.47%), Tata Steel (down 1.56%), Vedanta (down 0.83%), Hindalco Industries (down 0.77%) and Steel Authority of India (down 0.76%) declined.

National Aluminium Company (up 0.92%), Hindustan Zinc (up 0.35%) and Hindustan Copper (up 0.25%) advanced.

Stocks in Spotlight:

Reliance Industries rose 0.62% to Rs 1562.20. RIL said, its subsidiary Reliance Jio Infocomm (Jio) launched the "NEW ALL-IN-ONE PLANS". These plans will provide up to 300% more benefits to the Jio consumers, upholding the Jio promise of providing the best-quality service at the lowest price globally.

Bharti Airtel fell 1.63% at Rs 453.35. The company said its board approved raising up to $3 billion through a mix of equity and debt.

State Bank of India slipped 0.85% to Rs 339. SBI board on Wednesday approved the lender's proposal to sell 8.25% stake in UTI AMC.

Wipro rose 0.60% to Rs 243.65. The IT major announced the launch of its NextGen Cyber Defence Centre (CDC) in Melbourne, Australia. Wipro also plans to launch similar CDCs in other cities in Australia and offer cyber resilience and provide digital protection to large government organizations.

JSW Steel fell 2.44% to Rs 253.45. The company announced that the resolution plan for Vardhman Industries has been approved by the NCLT under Insolvency and Bankruptcy Code, 2016. The Company had preferred an appeal before National Company Law Appellate Tribunal (NCLAT) challenging certain portions of NCLT orders. The company further added that the judgment on the same has been pronounced allowing the said Appeal of JSW.

RBI Policy Outcome:

Investors were hoping for a 25 basis points rate cut. However, the Reserve Bank of India (RBI)'s Monetary Policy Committee (MPC) at its meeting today (5 December 2019) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15%. Consequently, the reverse repo rate under the LAF remains unchanged at 4.90%, and the marginal standing facility (MSF) rate and the bank rate at 5.40%.

The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/-2%, while supporting growth.

All members of the MPC - Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das - voted in favour of the decision.

The MPC recognised that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture.

Accordingly, the MPC decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.

Real GDP growth for 2019-20 is revised downwards from 6.1% in the October policy to 5% to 4.9-5.5% in H2 and 5.9-6.3% for H1:2020-21.

The CPI inflation projection is revised upwards to 5.1-4.7% for H2:2019-20 and 4-3.8% for H1:2020-21, with risks broadly balanced.

While improved monetary transmission and a quick resolution of global trade tensions are possible upsides to growth projections, a delay in revival of domestic demand, a further slowdown in global economic activity and geo-political tensions are downside risks, the MPC statement stated.

Foreign Markets:

Overseas, most shares in Europe and Asia were trading higher on Thursday on signs the United States and China were on track for a preliminary trade deal.

The US stock market finished higher on Wednesday, 04 December 2019, snapping three days of loosing streak, as investors chased for bargain hunting on renewed optimism about a potential trade deal after reports indicated the U.S. and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal. However, market gains capped after disappointing economic data, including a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of November.

Beyond China, President Donald Trump has been pushing ahead on trade disputes all around the world recently. On Tuesday, he proposed tariffs on $2.4 billion in French products in retaliation for a tax on global tech giants including Google, Amazon and Facebook. That follows a threat Monday to raise tariffs on steel and aluminum from Argentina and Brazil.

In economics news, US non-manufacturing index dipped to 53.9 in November after climbing to 54.7 in October, a report released by the Institute for Supply Management on Wednesday showed. A reading above 50 indicates service sector growth. Meanwhile, the new orders index rose to 57.1 in November from 55.6 in October and the employment index climbed to 55.5 from 53.7.

US private sector employment increased by 67,000 jobs in November after climbing by a revised 121,000 jobs in October, according to a report released by payroll processor ADP on Wednesday. The weaker than expected job growth came as a continued increase in employment in the service-providing sector was partly offset by a loss of jobs in the good-producing sector.

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