Daily Big Picture – Volatility Prevails Ahead Of Key RBI Policy Outcome

Today’s Action:

Benchmark indices rebound from afternoon’s low. Broader markets ended mixed.

Daily Market Review:

Volatility continues to loom over the market, ahead of Reserve Bank of India’s (RBI) monthly monetary policy. The RBI’s six-member committee is set to announce the policy on Wednesday, and reports suggest that the central bank is unlikely to change the repo rate on account of higher inflation.

While the market opened lower, the announcement of the Nikkei India Services Purchasing Managers Index mounted a selling pressure on the bourses. However, in the end both the indices managed to cut losses to escape a distribution day.

Nikkei India Services Purchasing Managers Index (PMI), which is the seasonally adjusted business activity index, dipped into the negative territory for November. The PMI index stood at 48.5 in November, when compared with 51.7 in October. A reading above 50 indicates economic expansion, whereas reading below 50 points toward contraction.

Today, the Nifty observed a range-bound trading and was in range of 10,069.10-10,147.95 to end the day at 10,118.25(-0.09%). The barometer index, BSE Sensex, also observed a similar trend and was trading in the range of 32,682.52-32,893.05 to close at 32,802.44 (-0.20%).

The action in the broader market observed a divergent trend, as the Nifty Midcap ended with a gain of 0.03% whereas Nifty Small cap posted a loss of 0.25%.

The market breadth, which indicates the overall health of the market, was weak today. On the NSE, 581 stocks advanced and 946 stocks declined. A total of 44 stocks remain unchanged.

Sectoral chart also observed a mixed trend, the top-three losers among all the indices were Nifty Metal (-0.82%), Reality (-0.55%), and Auto (-0.53%), while the top-gainers were Nifty PSU Bank (+1.37%), Media (+0.91%), and Energy (+0.29%).

The MarketSmith IND 47 Index, our proprietary lists of the top 47 stocks in technical chart and fundamental chart, lost 0.35 % today.

In stock talk, Fiberweb (India) was in limelight as the stock gained 7.6% intraday to INR 350, after the Company announced a bonus issue of 1:1 share. The announcement was made today during market hours.

In other economic news, rating agency Fitch cuts India’s FY 2018 Gross domestic product (GDP) forecast to 6.7% (from its previous 6.9%), as the rebound in the growth was weaker-than-expected. The agency has also trimmed the GDP growth forecast of FY 2019 to 7.3%, from its previous projection of 7.4%. However, Fitch expects GDP growth will pick up in the next two years, backed by structural changes and higher disposable income in India.

The trading volumes at the bourses were marginally higher than Monday’s session. However, the decline on the index is not sufficient to mark a distribution day. Hence, the Indian market status remains at “Confirmed Uptrend” with a distribution day count of four on both the indexes.

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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