Sensex, Nifty near day's low; IT stocks advance

Key indices were trading near day's low in mid-afternoon trade. Market sentiment was dented by the Reserve Bank of India cutting the country's economic growth projection for this fiscal to 6.1% from 6.9%.

Selling was broad based. IT stocks bucked weak market trend. The Nifty slipped below its 200-day moving simple moving average placed at 11,262.32. At 14:26 IST, the 31-units, the S&P BSE Sensex, was down 306.16 points or 0.8% at 37,800.71. The Nifty 50 index was down 91.25 points or 0.81% at 11,222.75.

Broader market was under pressure. The S&P BSE Mid-Cap index was down 0.6%. The S&P BSE Small-Cap index was down 0.35%.

The market breadth was weak. On the BSE, 942 shares rose and 1593 shares fell. A total of 245shares were unchanged. In Nifty 50 index, 17 stocks advanced and 33 stocks declined.

The Reserve Bank of India (RBI)'s monetary policy committee (MPC) at its meeting today (4 October 2019) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.15% from 5.40% with immediate effect. Consequently, the reverse repo rate under the LAF stands reduced to 4.90%, and the marginal standing facility (MSF) rate and the Bank Rate to 5.40%.

The MPC also decided to continue with an 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.

Real GDP growth for 2019-20 is revised downwards to 6.1% from 6.9% in the August policy. GDP is expected at 5.3% in Q2 FY2019-20 and in the range of 6.6%-7.2% for H2 FY 2019-20 with risks evenly balanced. GDP growth for Q1 FY2020-21 is also revised downwards to 7.2%.

IT shares bucked weak market trend as rupee edged lower against the dollar. Tech Mahindra (up 1.52%), Wipro (up 1.23%), TCS (up 1.03%), Infosys (up 1.02%), NIIT Technologies (up 1%), MphasiS (up 0.18%), HCL Technologies (up 0.09%) and Hexaware Technologies (up 0.09%). The Nifty IT index was up 0.75% at 15,393.05.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 70.9975, compared with its close of 70.8750 during the previous trading session. A weak rupee boosts revenues of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Godrej Consumer Products rose 1.33% to Rs 668.95, recovering from a 4.56% decline in the past three sessions, after the company provided an overall summary of the operating performance and demand trends witnessed during the quarter ended 30 September 2019.

The company said that during the quarter it witnessed relatively mixed demand across its geographies of operations. In India, demand continued to be challenging, impacted by a general consumption slowdown. Despite sluggish demand conditions, the firm recorded higher than mid-single digit volume growth. The uplift in volume growth was led by recovery in household insecticides, new product launches, effective marketing campaigns and tactical consumer offers. The sales value growth will be very close to the last quarter's sales value growth. The company added that it looks forward to a gradual improvement in consumer demand in the quarters ahead, aided by a good monsoon and government efforts to stimulate the economy. In Indonesia, the firm recorded low double digit constant currency sales growth, driven by new product launches and several go-to-market initiatives.

Meanwhile, the yield on 10-year benchmark federal paper rose to 6.649% at 14:13 IST compared with 6.606% at close in the previous trading session.

In the commodities market, Brent crude for December 2019 settlement was up 38 cents at $58.09 a barrel. The contract rose 0.03% to settle at $57.71 a barrel in the previous trading session.

MCX Gold futures for 5 December 2019 settlement rose 0.1% at Rs 38,443.

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