What changed for the market while you were sleeping? 10 things you should know – Moneycontrol.com
The market fell sharply on December 5 after the Reserve Bank of India kept policy rates unchanged and slashed inflation forecast for second half of FY19. The correction was largely in line with the global weakness and continued for second straight session on caution ahead of states elections results due next week.
The Nifty50 closed 86.60 points lower at 10,782.90 and managed to hold the 200-daily moving average, which is placed around 10,747 levels.
Experts said if the index breaks its 200-DMA then there could be steep correction in the market, but if it holds till states elections results then there could be possibility of index hitting 11,000 levels.
The 30-share BSE Sensex was down 249.90 points at 35,884.41 due to selling across sectors barring IT which ended flat. The broader markets also caught in bear trap with Nifty Midcap index underperforming frontliners, falling 1.5 percent.
India VIX moved up by 1 percent to 18.29 levels. However it has to cool down below 17-16 zones to get the smooth ride to surpass immediate hurdle zones.
According to Pivot charts, the key support level is placed at 10,746.93, followed by 10,710.97. If the index starts moving upward, key resistance levels to watch out are 10,819.93 and then 10,856.97.
The Nifty Bank index closed at 26,519.60, down 174.20 points. The important Pivot level, which will act as crucial support for the index, is placed at 26,433.1, followed by 26,346.6. On the upside, key resistance levels are placed at 26,616.7, followed by 26,713.8.
Stay tuned to Moneycontrol to find out what happens in currency and equity markets today. We have collated a list of important headlines from across news agencies.
Asian markets fall after Canada arrests Huawei CFO
US stock futures tumbled on Thursday and Asian markets followed after Canadian authorities arrested a top executive of Chinese tech giant Huawei Technologies, fanning fears of further tensions between China and the United States.
S&P500 e-mini futures ESc1 fell almost 2 percent at one point in thin Asian morning trade and were last were down 0.7 percent. Japan’s Nikkei slid 0.8 percent, with benchmark indexes in South Korea and Australia down 0.6 percent and 0.2 percent, respectively.
Trends on SGX Nifty indicate a flat to negative opening for the broader index in India, a fall of 83.5 points or 0.77 percent. Nifty futures were trading around 10,750-level on the Singaporean Exchange.
Ahead of OPEC meeting, Donald Trump urges producers to keep oil flowing
US President Donald Trump called on the Organization of the Petroleum Exporting Countries and its allies not to cut oil production next year, saying it would trigger higher oil prices worldwide.
“Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” Trump wrote in a tweet ahead of the group’s meeting this week to discuss possible cuts.
OPEC meets in Vienna on December 6 to weigh production and will hold talks with allies such as Russia. Official US government oil production and inventory data are also due on December 6. Saudi Arabia, OPEC’s de facto leader, has pressed for steep output reductions but has faced pressure from Trump to keep oil flows steady to keep prices low, rather than reduce inventory.
Oil prices ease in cautious trading ahead of OPEC meeting
Oil prices dipped on Thursday in tepid trading ahead of a meeting by producer group OPEC that is expected to result in a supply cut aimed at draining a glut that has pulled down crude prices by 30 percent since October.
US West Texas Intermediate (WTI) crude futures were at $52.57 per barrel at 0109 GMT, down 32 cents, or 0.6 percent, from their last close. International Brent crude oil futures were down 17 cents, or 0.3 percent, at $61.39 per barrel.
RBI MPC trims H2FY19 inflation forecast to 2.7-3.2%
The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) on December 5 cut H2FY19 inflation forecast to 2.7-3.2 percent from 3.9-4.5 percent earlier. It pegged H1 FY20 inflation at 3.8-4.2 percent. In a post-policy media briefing, RBI Governor Urjit Patel said, “retreat in energy prices has led to a decline in inflation.”
The MPC kept the repo rate unchanged at 6.50 percent and retained the stance of calibrated tightening of monetary policy in line with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of plus or minus 2 percent.
Cabinet likely to clear policy to boost exports of agri commodities
The Union Cabinet is expected to approve on December 6 a policy to boost exports of agriculture commodities such as tea, coffee and rice and increase the country’s share in global agri trade, an official said. The Commerce Ministry has sent the final agri export policy to the Cabinet.
The proposed policy would focus on all aspects of agricultural exports including modernising infrastructure, standardisation of products, streamlining regulations, curtailing knee-jerk decisions, and focusing on research and development activities.
“The government will aim at a stable export policy for agricultural products. There will be an assurance that processed agri items and organic products will not be brought under the ambit of any kind of export restrictions such as imposition of minimum import price, export duty, export bans and quota restrictions,” the official said.
RBI to set up panel to look into problems of MSMEs
The Reserve Bank of India said an expert committee will be constituted to propose long-term solutions for the economic and financial sustainability of the MSME sector. The panel’s composition and its terms of reference will be finalised by the end of December, the RBI said in ‘Statement on Developmental and Regulatory Policies’.
The report of the panel will be submitted by the end of June 2019. “It is important to understand the economic forces and transactions costs affecting the performance of the MSMEs, while often the rehabilitation approach to the MSMEs stress has focused on deploying favourable credit terms and regulatory forbearances,” it said.
Rupee rises to 70.46 against US dollar
The rupee ticked higher by 3 paise to 70.46 against the US dollar on December 5 amid weakness in the greenback and easing crude oil prices. Forex traders said the rupee’s rise was supported by dollar-selling by exporters and banks.
Meanwhile, the Reserve Bank of India on December 5 left the repo rate unchanged at 6.5 percent while maintaining the stance of ‘calibrated tightening’ of policy. At the Interbank Foreign Exchange (forex) market, the rupee opened lower at 70.70 and lost further ground to hit a low of 70.75.
Liquidity situation comfortable, but will step in as lender of last resort if necessary: RBI
There is more than enough liquidity in the system at the moment, but the Reserve Bank of India will step in as a lender of last resort if necessary, Deputy Governor Viral Acharya said on December 5.
The central banker pointed out that over the last couple of months, the weighted average call rate has been consistently trading below the benchmark repo rate, which is a sign of the market being flush with liquidity.
Acharya said the RBI had increased its pace of open market operations (OMOs) over the past three months in order to offset the impact of a short-term liquidity crunch that gripped the market during the festive season and when the central bank had to step in to stem the fall in the rupee.
RBI issues draft norms on NRI participation in interest rate derivative market
The Reserve Bank of India (RBI) Wednesday issued draft guidelines on non-residents’ participation in the interest rate derivative (IRD) market. The draft norms have proposed non-resident Indians’ (NRIs) access to the IRD market, allowing them to hedge their rupee interest rate risk flexibly using any available IRD instrument, RBI said in a release.
“Non-residents will also be permitted to participate specifically in the overnight indexed swap (OIS) market for purposes other than hedging,” it said.
With inputs from Reuters & other agencies