Indian Stock Markets Open Marginally Up; RBI Policy Decision in Focus

Thu, 5 Dec 09:30 am

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Asian stock markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.4% while the Hang Seng is up 0.5%. The Nikkei 225 is trading up by 0.7%. Wall Street rebounded on Wednesday as investor optimism got a boost from US President Donald Trump's remarks that talks with China on an interim trade deal were going "very well."

Back home, India share markets opened marginally higher. The BSE Sensex is trading up by 84 points while the NSE Nifty is trading up by 22 points. Both, the BSE Mid Cap index and BSE Small Cap index opened up by 0.2%.

Sectoral indices have opened the day on a mixed note with healthcare and telecom stocks witnessing selling pressure. Consumer Durables and automobiles stocks are trading in green.

The rupee is currently trading at 71.48 against the US$.

The rupee clawed back its lost territory to settle 13 paise higher at 71.53 to the US dollar on renewed hopes about US-China trade deal.

At the interbank foreign exchange, the rupee opened weak at 71.76 against the US dollar.

During the day, the domestic unit touched a high of 71.53 and a low of 71.81. The local unit finally settled for the day at 71.53 against the US dollar, higher by 13 paise over its previous closing.

The Indian unit went through bouts of volatility for a better part of the session as caution prevailed among participants ahead of Reserve Bank's policy meet outcome.

The focus of the mainstream media currently is that the RBI's rate cut will translate into better economic activity in the near term.

Like this chart shows, RBI rate cuts have always had a big gap with bank lending rates. It will be a while before lower lending rates stoke the economy.

Yet Another RBI Rate Cut May Not Result in Lower Lending Rates

Therefore, hoping for an immediate revival in the economy is futile. The RBI has no magic wand to do this.

Rather look for stocks that can outperform irrespective of the RBI policy.

Meanwhile, in his monthly sectoral check-up, Apurva Sheth makes an interesting observation on the Bank Nifty. The index has rallied relentlessly over 8 weeks. And, this has happened only twice since 2010!

With the monetary policy decision ahead, should you enter this sector at this level?

Apurva decodes this and more in the video below:

Moving on to the news from the global space. US President Donald Trump said on Wednesday that trade talks with China were going "very well," sounding more positive than on Tuesday when he said a trade deal might have to wait until after the 2020 US presidential election.

His comments on Tuesday, which raised the prospect of a long extension of the trade tensions between the world's biggest and second-biggest economies, pushed down share prices sharply around the world.

Stocks rebounded on Wednesday when Bloomberg reported that the two sides were closer to agreeing how many tariffs would be rolled back in a "phase one" trade deal.

Market participants fear that the US-China standoff, which has marked Trump's presidency since it began in 2017, will add to the slowdown in the global economy.

Meanwhile, Vijay Bhambwani in his latest video titled: Why I Am Positive About the Markets and the Economy for Next 11 Months, analyses the impact of the US election on Indian investors. Tune in to find out.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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