Post Session: Quick Review

Indian equity benchmarks ended near intraday high points on Friday, as the Dalal Street cheered the RBI’s MPC decision to keep policy rates unchanged. The Monetary Policy Committee, led by Governor Shaktikanta Das, voted unanimously to hold the policy repo rate at 4.00 percent. The reverse repo rate was retained at 3.35 percent. The Marginal Standing Facility or MSF rate, and the Bank rate remained unchanged at 4.25 percent. After a positive start, key indices remained higher for the whole day, taking support with the International Monetary Fund’s statement that India's economy, severely affected by the coronavirus pandemic, is gradually recovering. It said India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 percent and held out hopes for further improvement on better consumer demand.

Markets extended gains in the last hour of the trade, after the Finance Ministry in its latest Monthly Economic Review has said that the Indian economy is witnessing a V-shaped recovery as the GDP has recorded a quarter-on-quarter growth of 23 per cent in the July-September quarter of this fiscal. As per the report, this V-shaped recovery, evident at the half-way stage of 2020-21, reflects the resilience and robustness of the Indian economy. It further noted that the fundamentals of the economy remain strong as gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery. Adding more optimism, Finance Minister Nirmala Sitharaman said that India’s economy will return to growth in 2021-22 and higher spending in the budget due in February will lay the foundations for even stronger growth in the next four to five years.

On the global front, European markets were trading higher after the Pentagon added more Chinese firms to a blacklist of alleged Chinese military companies. Asian markets ended mostly higher on Friday, after South Korea posted a current account surplus of $11.66 billion in October, up from $10.21 billion in September. The goods account surplus widened to $10.15 billion, compared to the $8.03 billion in October 2019. The services account deficit decreased to $0.66 billion, from $1.72 billion in October last year, owing to an improvement in the travel and transport accounts. The primary income account surplus widened from $1.83 billion in 2019 to $2.45 billion in October of this year, in line with the increase in the investment income.

The BSE Sensex ended at 45079.55, up by 446.90 points or 1.00% after trading in a range of 44665.91 and 45148.28. There were 25 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.42%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 2.14%, Telecom up by 1.88%, Consumer Durables up by 1.40%, FMCG up by 1.37% and Metal up by 1.22%, while Energy down by 0.60% was the only losing index on BSE. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 4.20%, Ultratech Cement up by 4.10%, Sun Pharma up by 3.80%, Bharti Airtel up by 2.91% and Hindustan Unilever up by 2.85%. On the flip side, Reliance Industries down by 0.86%, Bajaj Finserv down by 0.74%, HCL Tech. down by 0.34%, HDFC down by 0.17% and NTPC down by 0.10% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent. Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent.

The monetary policy committee (MPC) of RBI also decided to continue with the accommodative stance as long as necessary - at least during the current financial year and into the next financial year - to revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the economic growth front, real gross domestic product (GDP) growth is projected at (-)7.5 per cent in 2020-21: (+)0.1 per cent in Q3:2020-21 and (+)0.7 per cent in Q4:2020-21; and (+)21.9 per cent to (+)6.5 per cent in H1:2021-22, with risks broadly balanced. On the inflation front, CPI inflation is projected at 6.8 per cent for Q3:2020-21, 5.8 per cent for Q4:2020-21; and 5.2 per cent to 4.6 per cent in H1:2021-22, with risks broadly balanced.

The CNX Nifty ended at 13258.55, up by 124.65 points or 0.95% after trading in a range of 13152.85 and 13280.05. There were 39 stocks advancing against 10 stocks declining, while 1 stock remain unchanged on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 4.42%, ICICI Bank up by 4.19%, Adani Ports & SEZ up by 4.11%, Ultratech Cement up by 4.04% and Sun Pharma up by 3.79%. On the flip side, Reliance Industries down by 0.88%, HDFC Life Insurance down by 0.73%, Bajaj Finserv down by 0.68%, HCL Tech. down by 0.43% and BPCL down by 0.41% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 44.40 points or 0.68% to 6,534.67, France’s CAC increased 28.28 points or 0.51% to 5,602.64 and Germany’s DAX was down by 4.72 points or 0.04% to 13,257.58.

Asian markets ended mostly higher on Friday with expectations that Japan, US and Europe countries will deliver large-scale additional stimulus measures. However, Japanese shares ended lower after reports that US drug-maker Pfizer is dialing back its Covid-19 vaccine rollout plan for this year due to supply chain problems. Meanwhile, Chinese shares ended almost flat on escalating tensions between the world's two largest economies after the US added Chinese chipmaker SMIC and oil giant CNOOC to a blacklist of alleged Chinese military companies.