Nifty Ends in the Red After 5-Day Winning Streak – Can the RBI’s CRR Cut Spark Growth?

At the close, the Nifty 50 was at 24,677.80 down by 0.12%

The market started on a positive note today but couldn’t hold its momentum. The Nifty 50 index slipped by 0.12% to close at 24,677.80, breaking its 5-day winning streak. This wasn’t just a random dip—it’s tied to some key developments from the Reserve Bank of India’s monetary policy announcement. Let’s unpack what went down and what it could mean for the days ahead.

Market Mood: What’s Behind the Volatility?

The RBI kept the repo rate unchanged at 6.5%, a move that wasn’t unexpected. But what caught everyone’s attention was the 50-basis point cut in the cash reserve ratio (CRR), aimed at infusing ₹1.16 lakh crore into the financial system. This liquidity boost should have been a positive trigger, but the market seemed more focused on other signals.

• Inflation Concerns: The RBI revised its CPI inflation forecast for FY25 to 4.8%, up from 4.5%.
• GDP Growth Downgrade: The growth projection for FY25 was slashed to 6.6%, down from 7.2%.

These numbers didn’t inspire confidence, especially as high inflation and a global slowdown remain big concerns.

Sector Watch: Winners and Losers

While the benchmark indices struggled, the broader market painted a mixed picture.

• Gainers: Metals and auto stocks stood out, with optimism around improved liquidity and demand.
• Losers: IT and private banks pulled the market down, dampening investor sentiment.

Despite today’s setback, the Nifty’s technical chart still shows strength. The breakout from an inverse head-and-shoulders pattern suggests the potential for an upward move. Could we see the index climb toward 25,500 in the coming days? It’s possible, but not without challenges.

The Bigger Picture: Is the Market Slowing Down?

The RBI’s decision to cut the CRR is a clear attempt to keep liquidity flowing as the economy shows signs of slowing. But with inflation still high and global tensions—like the Middle East conflict and Russia-Ukraine war—casting shadows, the road ahead isn’t smooth.

This cautious stance was reflected in today’s trade. The market didn’t react strongly to the RBI’s announcements because they were largely in line with expectations. However, the downgrade in growth projections raises a crucial question: Are we headed for slower times?

What Lies Ahead for Investors?

For now, experts suggest a buy-on-dips strategy, as the market still shows resilience. The CRR cut is likely to benefit sectors like banking and auto in the short term, but the focus will shift to other factors:

1. Inflation data in the coming months.
2. Global market trends, especially from the U.S. and Asia.
3. Sectoral shifts, with opportunities in PSU banks, metals, and autos.

Global Markets and a Bold Prediction

While India’s markets faced turbulence, global trends added more layers of complexity. Chinese stocks rallied, but South Korea’s political turmoil and investor caution about U.S. payroll data kept the broader sentiment in check.

Amidst all this, Morgan Stanley made a bold prediction: the Sensex could hit 105,000 by the end of 2025, with a 30% probability in their bull case scenario. While this might sound overly optimistic, it reflects confidence in India’s long-term growth story, driven by strong earnings and fiscal stability.

Final Thoughts: Should You Be Worried?

Today’s dip isn’t necessarily a sign of trouble—it’s more of a breather after a strong rally. The RBI’s cautious yet growth-oriented stance gives some comfort, but the market is navigating a tricky phase with inflation, geopolitical risks, and slowing growth in focus.

For now, stay alert, watch sectoral movements, and keep an eye on global cues. The market could still surprise us, either way. Is a breakout ahead? Or is the slowdown just beginning? Only time will tell.

Bank Nifty: Down by 0.18%

The Indian stock market ended another volatile session on a somber note as both the Bank Nifty and the BSE Sensex closed in red. The Bank Nifty, after opening in green, slipped by 0.18%, settling at 53,509.50. Similarly, the Sensex recorded a marginal dip of 0.07%, closing at 81,709.12.

In today’s market, the Metal sector emerged as the clear winner, with a solid gain of 1.23%. Notable performers within this sector include:

• Vedanta Ltd., which surged by 6.12%, leading the pack with strong gains.
• Jindal Stainless Ltd., which also saw a healthy rise of 1.94%.

On the flip side, the Media sector faced some struggles, emerging as the top loser with a decline of 0.33%. The key losers in this space included:

• Tips Music Ltd., which dropped 3.32%.
• Dish TV India Ltd., which lost 1.92%.

Foreign Institutional Investors (FPI) were net sellers, with a net value of -₹1,830.31 crore. The buy value stood at ₹12,013.83 crore, while the sale value reached ₹13,844.14 crore.

Domestic Institutional Investors (DII) were net buyers, with a net value of ₹1,659.06 crore. The buy value for DIIs was ₹11,651.37 crore, and the sale value was ₹9,992.31 crore.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included Bank of Baroda with a 1.55% increase, Axis Bank with a 1.50% increase, Canara Bank with a 0.95% increase, Punjab National Bank with a 0.92% increase, and Kotak Bank with a 0.01% increase.

On the other hand, the biggest losers in the sector included AU Bank with a 1.63% decline, IndusInd Bank with a 0.99% decline, ICICI Bank with a 0.56% decline, HDFC Bank with a 0.55% decline, and Federal Bank with a 0.47% decline. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 6th December, 2024

Stocks Highlights

Tata Motors Ltd. saw a solid 3.21% increase in its share price, closing at ₹818.00, up from its previous close of ₹792.55. The stock has been on a bullish run lately, but what’s driving the momentum? Here are some key highlights:

• Intraday Performance: Over the last 20 years, only 2.4% of trading sessions saw intraday gains higher than 5%. This shows that today’s rally is relatively significant.
• Return on Equity (ROE): Tata Motors delivered a 36.97% ROE for the year ending March 31, 2024, a massive improvement compared to its 5-year average of -1.07%. This indicates the company is generating higher returns for shareholders.
• Revenue Growth: The company posted an annual revenue growth of 26.61%, outperforming its 3-year CAGR of 20.47%.
• Buy Signal: A 10-day moving average crossover appeared yesterday, signaling bullish momentum. Historically, stocks have shown an average price gain of 4.13% within 7 days after this signal over the last 5 years.

On the other hand, Cipla Ltd. experienced a 1.42% dip, with its stock closing at ₹1,477.00, down from its previous close of ₹1,498.25. Let’s break down what’s behind this drop:

• Intraday Performance: Over the last 20 years, only 0.99% of trading sessions saw intraday declines greater than 5%, so today’s decline is relatively modest, but still noteworthy.
• Return on Equity (ROE): Cipla delivered a 15.43% ROE for the year ending March 31, 2024, surpassing its 5-year average of 11.98%, signaling solid performance in generating returns for its shareholders.
• Revenue Growth: Cipla’s annual revenue growth of 14.17% outperformed its 3-year CAGR of 10.82%, showing that the company has been able to maintain strong growth over the past few years.
• Sell Signal: A 20-day moving average crossover appeared on December 4, 2024, signaling bearish momentum. Historically, stocks have seen an average price decline of -1.73% within 7 days after this signal over the last 5 years.

Advance Decline Ratio

Today, the advance-decline ratio was 1.49 and the market breadth was positive. The volatility index India Vix decreased by 2.66 to settle at 14.14 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1671
Decliners – 1119
52Wk High – 105
52Wk Low – 8
High Band Hitters – 150
Low Band Hitters – 40
200d SMA – 23717
50d SMA – 24548
20d SMA – 24051

Top Gainers and Losers Stocks

The top gainers were Tata Motors (+3.21%), Bajaj Auto (+2.34%), Axis Bank (+1.50%), BPCL (+1.28%), and Dr. Reddy (+1.10%).

The top losers were Adani Ports (-1.51%), Cipla (-1.42%), Bharti Airtel (-1.09%), HDFC Life (-1.08%), and IndusInd Bank (-0.99%).

Top Gainers and Losers Sectors

The top gainer sectors were Metal (+1.23%), Consumer Durables (+1.09%), Auto (+0.94%), FMCG (+0.24%), and Oil & Gas (+0.03%).

The top losers sectors were Media (-0.33%), IT (-0.20%), Pharma (-0.13%), Financial Services (-0.11%), and Realty (-0.05%).

SECTORS – NOTABLE ACTION
METAL +1.23%
CONSUMER DURABLES +1.09%
AUTO +0.94%
MEDIA -0.33%
IT -0.20%
PHARMA -0.13%

Stocks Ban List

(SEBI) F&O ban list (GRANULES close at +575.65), and (MANAPPURAM close at -167.85) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

PVRINOX, and HINDCOPPER stocks has the possibilities of entrants in the ban list.

Daily Pivots

As per the above pivots data, 24500 to 24900 is the Nifty 50 trading range.  

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Nifty Hits One-Month High: Is Nifty on the Verge of a Major Breakout? The Market’s Stunning Recovery Revealed!

This article is only for educational purposes and is not an investment advice.