Daily Big Picture – Key Indices Turn Sluggish After RBI’s Rate Cut Announcement

DailyBigPicture-MarketSmithIndia-WilliamOneilIndiaToday’s Action:

Benchmark indices retreat from highs after RBI’s monetary policy review. The Nifty Midcap index continues to trade flat, while the Nifty Smallcap index extends losses from yesterday’s session.

Daily Market Review

The benchmark indices witnessed subdued trading in today’s session in anticipation of the Reserve Bank of India’s bi-monthly monetary policy review meeting outcome. After starting the day on a positive note, the key indices quickly erased all gains and slid into the negative zone. The indices dipped further down after the RBI’s rate cut announcement, to end the day with significant losses.

As widely expected by market analysts, the Monetary Policy Committee cut the repo rate by 25 basis points to 6%, in view of declining inflation and the slowdown in economic activities. The key interest rate now stands at a seven year low. Further, the apex bank also slashed the reverse repo rate, the rate at which it borrows from commercial banks,  by 25 basis points to 5.75%

Today, the Nifty opened at a fresh all-time high of 10,132.40. However, the index pared gains and trended downwards as the day progressed to hit an intraday low of 10,056.40. The index finally settled at 10,081.50, down 0.33% from yesterday’s closing price. Similarly, the BSE Sensex, after opening higher at 32,641.58, touched an intraday high of 32,660.48. In the second half of the session, the index hit an intraday low of 32,405.90 and closed for the day at 32,476.74, down 98.43 points or 0.30% from yesterday’s close.

The market breadth, indicating the overall health of the market, was tilted towards the losers in today’s session. On the NSE, 930 stocks declined, compared with 550 stocks advancing, and 60 stocks remaining unchanged.

The Nifty Midcap index managed to hold ground as it ended flat at +0.02%, while the Nifty Smallcap index witnessed selling pressure to end the day with losses of 0.36%.

In contrast to the overall market, the MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, fared well to gain 0.26%, in today’s trading session.

On the sectoral front, barring the Nifty Energy index, which gained 0.80%, all the other indices came under the grip of the bears. The Nifty FMCG, IT, and Pharma indices declined the most with losses of 0.97%, 0.69%, and 0.67%, respectively.

For a major part of today’s session, low trading volume was observed on both the benchmark indices as investors took a cautious stance ahead of the key announcement. However, post the release of RBI’s outcome, trading activity picked up steam. High-volume down day for the Sensex resulted in a distribution day, while the Nifty escaped without a distribution day owing to its lower trading volume. The revised distribution day count for the Sensex and the Nifty stands at 3.0 and 1.0, respectively. The Indian market condition remains in a Confirmed Uptrend.

Current Outlook:

– Market environment conducive for new purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules.

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