RBI Holds Rates Steady as Nifty Climbs Mt 21k

At the close, the Nifty 50 was at 20,969.40 up by 0.33%

The NSE Nifty 50 index showcased resilience as it commenced on a positive note, exhibiting a 0.33 percent uptick and culminating in a robust green closure. On December 8, the market regained momentum post a brief halt, scaling new highs following the Reserve Bank of India’s resolute decision to maintain the key interest rate unaltered for the fifth consecutive time. This steadfast move led to the Nifty breaching the 20,950 mark and settling at 20,969.40 levels, culminating in slight gains.

The market’s upward trajectory found support from the IT sector’s stalwarts and a rekindled interest in select private banking stocks, reigniting bullish sentiments. Noteworthy was the rotational buying pattern witnessed across heavyweight stocks, affirming the potential continuation of this bullish trend.

The Monetary Policy Committee’s consistent stance in recent policies underlines the belief that the rate hike cycle has concluded. Instead, the RBI is poised to utilize liquidity management tools to combat inflation concerns. Given the persistent worries about inflation, a reversal in policy rates isn’t expected until at least mid-2024. Moreover, global economic trends and international rate adjustments will notably influence the RBI’s forthcoming policy decisions.

The market’s buoyancy, supported by sectoral strengths and RBI’s steadfast approach, hints at a sustained positive momentum, affirming investor confidence in the Indian equity market.

Bank Nifty: Up by 0.90%

The financial market kicked off with vigor as Bank Nifty and BSE Sensex soared into positive territory. Bank Nifty demonstrated an impressive 0.90 percent gain, closing at a commendable 47,262.00, while BSE Sensex climbed 0.44 percent, culminating at a noteworthy 69,825.60, marking a day’s high. Notably, Bank Nifty’s rebound from intraday lows to an all-time high at closure signals the robustness of the ongoing upward momentum.

In the sectorial landscape, the IT sector stood out with a notable surge of 1.31 percent. Key players such as HCL Technologies Ltd. and LTIMindtree Ltd. led the pack with significant increases of 2.85 percent and 2.57 percent, respectively. Conversely, the FMCG sector experienced a downturn, with Radico Khaitan Ltd. and United Spirits Ltd. facing declines of -2.16 percent and -1.95 percent, respectively.

The Foreign Institutional Investors/Foreign Portfolio Investors (FII/FPI) depicted a net buy value of 3,632.30, displaying a buy value of 19,329.28 against a sale value of 15,696.98. In contrast, Domestic Institutional Investors (DII) showed a net sell value of -434.02, indicating a buy value of 9,533.13 and a sale value of 9,967.15.

Bank Nifty

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

The gainers included Axis Bank with a 1.40% increase, HDFC Bank with a 1.38% increase, ICICI Bank with a 1.25% increase, Kotak Bank with a 0.86% increase, and Bank of Baroda with a 0.47% increase. On the other hand, the biggest losers in the sector included AU Bank with a 1.60% decline, Bandhan Bank with a 0.57% decline, Punjab National Bank with a 0.40% decline, and Federal Bank with a 0.10% decline. These results suggest that some banking stocks performed better for the day.

RBI’s December 2023 Bi-Monthly Monetary Policy Highlights

Unchanged Benchmark Interest Rate: RBI maintains stability, keeping the benchmark interest rate steady at 6.5%, reinforcing a consistent monetary stance.

Enhanced UPI Transaction Limit: Proposals to escalate UPI transaction limits for hospital and educational payments from Rs 1 lakh to Rs 5 lakh, facilitating higher-value transactions.

GDP Growth Projections: An upward revision in the GDP growth forecast for the current fiscal to 7% from the earlier 6.5%, with specific projections of 6.5% and 6% for the December and March quarters, respectively.

Retail Inflation and Uncertain Food Prices: Retained average retail inflation projection at 5.4% for FY24. Uncertain food prices could significantly influence inflation, especially due to intermittent vegetable price shocks in November and December.

Rupee Stability and Forex Reserves: The rupee demonstrated low volatility compared to peers in emerging markets, reflecting improved macroeconomic fundamentals and resilience amidst global challenges. Forex reserves at $604 billion as of December 1 ensure confidence in meeting external financing requirements.

Vigilance and Preparedness: RBI remains watchful and adaptive to the evolving economic outlook, affirming readiness to respond as needed. India is better positioned to navigate uncertainties compared to many other nations.

E-Mandate and Cloud Facility: Proposed increments in e-mandate limits for recurring payments to Rs 1 lakh from the current Rs 15,000. Additionally, plans to establish a cloud facility for the financial sector to bolster data security and privacy measures.

Upcoming Monetary Policy Committee Meeting: The next scheduled meeting of the monetary policy committee is set for February 6-8, 2024, signifying continuous monitoring and policy evaluation.

Indian Rupee Marginally Weakens Against US Dollar Post RBI’s Policy Announcement

Friday saw the Indian rupee experiencing a slight downtick, settling at 83.38 against the US dollar subsequent to the Reserve Bank of India’s decision to maintain the policy rate at 6.5 percent. A marginal decline of 2 paise was observed due to the strength of the American currency in international markets and an uptick in crude oil prices, factors that subdued investor confidence. Beginning at 83.35 against the dollar, the rupee closed at 83.38 in the interbank foreign exchange market, marking a negligible 2 paise decrease from the previous day’s close at 83.36.

The Monetary Policy Committee, comprising three RBI representatives and an equal number of external members, unanimously elected to retain the benchmark repurchase rate at 6.5 percent.

Although the RBI revised the economic growth forecast to 7 percent from the earlier 6.5 percent, Governor Shaktikanta Das cautioned against overly tightening monetary policies, citing potential growth risks. This emphasis aimed to clarify that maintaining the current policy stance did not imply an imminent shift to a neutral stance.

Following the RBI’s decision, the Indian rupee concluded on a neutral note. Simultaneously, Brent crude futures, a global oil benchmark, surged by 2.27 percent to $75.73 per barrel, contributing to a mixed market sentiment amid these deliberations.

Stocks Highlights

HCL Technologies Ltd. witnessed a commendable surge in its share price by 2.85%, reaching Rs 1,365.90 from its previous close at Rs 1,328.00. However, a sell signal indicating a bearish trend emerged due to a recent 5-day moving average crossover, historically leading to an average price decline of -2.06% within seven days in the last five years.

Despite this short-term signal, the company showcased robust long-term financial performance. Its annual revenue growth of 18.56% outperformed the 3-year compound annual growth rate (CAGR) of 12.86%, indicating sustained growth prospects. Notably, a fact check revealed that only 1.88% of trading sessions in the last 19 years experienced intraday declines higher than 5%, showcasing the stock’s overall stability.

Conversely, Adani Enterprises Ltd. experienced a -1.98% decline in its share price, moving from Rs 2,887.15 to Rs 2,829.90. Despite this, the company demonstrated exceptional long-term performance, with an annual revenue growth of 96.18%, surpassing its 3-year CAGR of 45.79%. Notably, only 4.8% of trading sessions in the past 19 years observed intraday gains higher than 5%, underlining a general stability in intraday trading for the stock.

Regarding expenses, the company allocated 2.9% of its operating revenues towards interest expenses and 1.37% towards employee costs as of the year ending March 31, 2023, showcasing a balanced expense management strategy.

Advance Decline Ratio

Today, the advance-decline ratio was 0.68, and the market breadth was negative. The volatility index India Vix decreased by 1.59 percent to settle at 12.47 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 994
Decliners – 1469
52Wk High –  190
52Wk Low – 9
High Band Hitters – 106
Low Band Hitters – 42
200d SMA – 18884
50d SMA – 19697
20d SMA – 20053

Top Gainers and Losers Stocks

The top gainers were HCL Technologies (+2.85%), LTIM (+2.57%), JSW Steel (+2.47%), Infosys (+1.71%), and Apollo Hospitals (+1.44%).

The top losers were Adani Enterprises (-1.98%), Adani Ports (-1.78%), ITC (-1.77%), Hero MotoCorp (-1.46%), and M&M (-1.46%).

Top Gainers and Losers Sector

The top gainers sector were IT (+1.31%), Financial Services (+0.91%), Realty (+0.53%), Consumer Durables (+0.24%), and Media (+0.06%).

The top losers sector were FMCG (-0.99%), Pharma (-0.80%), Oil & Gas (-0.72%), Auto (-0.55%) and Metal (-0.09%).

SECTORS – NOTABLE ACTION
IT +1.31%
FINANCIAL SERVICES +0.91%
REALTY+0.53%
FMCG -0.99%
PHARMA -0.80%
OIL & GAS -0.72%

Stocks Ban List

(SEBI) F&O ban list (BALRAMCHIN open at -400.00 and close at -392.70), (NATIONALUM open at -99.10 and close at -97.45), (SAIL open at -99.15 and close at -98.10), (IBULHSGFIN open at +207.05 and close at -201.00), (DELTACORP open at -140.70 and close at -137.25), (ZEEL open at +280.00 and close at +278.95), and (INDIACEM open at +263.85 and close at +271.10) 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.

HINDCOPPER, and MANAPPURAM stocks has the possibilities of enterance in the ban list.

INDIACEM stock has the possibilites of exit from the ban list.

Daily Pivots

As per the above pivots data, 20850 to 21050 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Volatility and Caution Prevail Ahead of RBI Policy Meeting
Foreign Inflows Propel Tech and Power Stocks to New Heights for Third Consecutive Day
Closing Strong Benchmark Indices Settle Near Day’s High Amidst Weak Global Cues

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