Market Wrap, Dec 5: Indices end near day's low as RBI pegs FY20 GDP at 5%

Markets ended a volatile trading session in the negative territory on Thursday after the Reserve Bank of India (RBI) paused during the fifth bi-monthly monetary policy and kept the repo rate unchanged a 5.15 per cent. The benchmark S&P BSE Sensex closed at 40,780 level, down 71 points or 0.17 per cent, while the Nifty50 index settled at 12,018 level, down 25 points or 0.21 per cent.

In the broader market, the S&P BSE mid-cap index slipped 0.23 per cent to settle at 14,868.85. The S&P BSE small-cap index, however, ended 0.1 per cent higher at 13,468.89 level.

At the December monetary policy meeting, the RBI took a breather and kept the repo rate unchanged, even as it said the monetary policy committee sees scope for a rate cut in the February review meeting. Addressing the media, RBI governor Shaktikanta Das said it is important to deliver rate cut at the right time, where the effect could be optimised. He added, the RBI wanted to see what possible measures the government would take to address the slowdown, including under Union Budget for FY2020-21. 

The MPC, however, sharply revised the FY20 gross domestic product (GDP) forecast to 5 per cent from previously projected growth rate of 6.1 per cent on weak domestic and global demand. 

The RBI, in its policy statement, said it would maintain the 'accommodative' stance as long as it was necessary to revive growth while ensuring that inflation remains within the target band of 4 per cent, +/- 2 per cent. Remember, the retail inflation in November inched up 4.62 per cent on higher vegetable prices.

Consequently, the CPI inflation projection has been revised upwards to 5.1-4.7 per cent for the second half of the financial year 2019-20 and 4.0-3.8 per cent for the first half of 2020-21.

That apart, the governor said on Thursday that the aggregate exposure of a lender to all borrowers at any point of time, across all non-banking financial company peer-to-peer platforms, will be capped at Rs 50 lakh, against Rs 10 lakh at present. The cap on the exposure of a single borrower, however, remains at Rs 50,000 across all NBFC peer-to-peer platforms.

Stocks that saw major movements today:
 

Shares of rate-sensitive sectors, mainly banking and automobiles, slipped up to 3 per cent after the Reserve Bank of India (RBI) maintained the status quo on repo rate at 5.15 per cent. Punjab National Bank (PNB), YES Bank, RBL Bank, State Bank of India (SBI), IndusInd Bank, Canara Bank and Federal Bank from the banking space; and Ashok Leyland, Tata Motors, and Motherson Sumi Systems from the automobiles pack were the top drags on the NSE.

On the upside though, Shares of Polycab India continued their upward journey, and hit a new high of Rs 1,090.8, up nearly 10 per cent on the BSE today, on the expectation of strong earnings going forward. The stock of the fast-moving electric goods (FMEG) company zoomed 100 per cent from its recent low of Rs 525, touched on August 22, 2019. It settled 4 per cent higher on the BSE at Rs 1,037 per share.

Here is how global markets performed today:

Stock markets in Asia inched up on Thursday on the possibility that China and the United States may soon seal a “phase one” deal to end their 17-month trade war, but conflicting messages from US President Donald Trump kept a lid on the advance.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5 per cent, Japan's Nikkei stock index rose 0.7 per cent, and Australian shares were up 1.2 per cent. European index STOXX 600, too, was ruling 0.27 per cent higher in the early trade today.