RBI Monetary Policy, US-China Trade War, and Top Cues in Focus Today

Fri, 6 Dec Pre-Open

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Indian share markets ended marginally lower yesterday. Benchmark indices gave up gains after the central bank kept its policy rate unchanged, surprising investors who were expecting at least a 25 basis-point cut.

Sectoral indices ended on a mixed note with stocks in the telecom sector and metal sector witnessing most of the selling pressure, while consumer durable stocks and IT stocks witnessed buying interest.

At the closing bell yesterday, the BSE Sensex stood lower by 71 points (down 0.2%) and the NSE Nifty closed down by 25 points (down 0.2%).

The BSE Mid Cap index ended the day down 0.3%, while the BSE Small Cap index ended up by 0.1%.

Top Stocks in Focus Today

From the IT sector, TCS share price will be in focus today as the company has successfully completed the finance transformation for Ayala Land Inc. (ALI), by migrating its operations to SAP S/4HANA, in the first such implementation in the Philippines.

From the banking sector, State Bank of India (SBI) share price will be in focus today as the lender's board approved the proposal to sell 8.25% stake in UTI AMC yesterday.

In a filing to exchanges, SBI said that "the executive committee of the central board of directors (ECCB) of the bank at its meeting held today has accorded approval, for divestment of SBI stake in UTI AMC up to 8.25% through IPO".

The bank said it offers to sale up to 1,04,59,949 equity shares subject to approval from the markets regulator and such other concerned authorities and departments.

SBI, Life Insurance Corporation, Punjab National Bank (PNB) and Bank of Baroda own 18.5% stake each in UTI AMC.

UTI AMC is planning to launch an initial public offer (IPO) by the end of this fiscal. The company will raise about Rs 26 billion.

From the finance sector, shares of HDFC Asset Management Company (AMC) will also be in focus today as the company said it will use a greenshoe option for sale of additional 0.86% stake via offer for sale (OFS).

RBI Keeps Interest Rates Unchanged

The Reserve Bank of India (RBI), in its monetary policy yesterday, kept key lending rate on hold. This was despite a worrying slowdown in the country that prompted the central bank to sharply reduce its economic growth forecast to 5% for the year through March.

The six-member monetary policy committee (MPC) unanimously voted to hold the key repo rate at 5.15% while the reverse repo rate was also held at 4.90%.

The RBI reiterated that it would maintain an accommodative stance as long as it is necessary to revive economic growth which slowed to 4.5% in the September quarter from 7% a year ago, to stand at its lowest in more than six years.

While acknowledging that growth has weakened further, the MPC noted that removing the impediments to future investments is the need of the hour.

The MPC also felt that it is better to wait for the upcoming budget to get a better clarity on further measures to be undertaken by the government and its impact on growth before easing the policy.

Note that after the RBI's decision to keep repo rate unchanged, the Bank Nifty Index fell sharply.

In the below video, Apurva Sheth predicted exactly the same. So, should you enter this sector at current levels?

Tune in to find out...

US-China Trade Talks

In the news from global financial markets, US President Donald Trump said 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 more.

And 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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