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CAPITALSTARS INDIAN EQUITY MARKET WRAP UP – 5 OCT 2018

market-wrap-up

Closing Bell: Sensex plunges 792 pts, rupee hits 74/$ as RBI holds rates; Infosys, TCS up.

The MPC’s decision to stand pat is a clear signal that inflation remains the anchor of monetary policy. Interest rates will not be used to manage the currency, but the MPC will respond to the inflationary consequences of depreciation.Currently, although higher oil prices and a weaker currency add to near-term cost pressures, the RBI acknowledged the expected inflation undershoot on lower food inflation and tighter financial conditions.
The pause also gives it a chance to wait and observe the impact of the hikes already delivered. Lastly, the change in its stance indicates the MPC remains ready to hike, if inflation pressures become more adverse.
Overall, given our view of an impending growth slowdown due to a significant tightening of financial conditions, 50bp in cumulative hikes already in place and the need for RBI to allow lagged effects of policy transmission to become apparent, we expect rates to remain unchanged over our forecast horizon.
The 30-share BSE Sensex was down 792.17 points or 2.25 percent to close at 34,376.99 and the 50-share NSE Nifty fell 282.80 points or 2.67 percent to 10,316.50.
About three shares declined for every share rising on the BSE.
Final capitulation started in index heavyweights suggested that it is a brutal fall. Reliance Industries fell over 6 percent. Bajaj Finance, Indiabulls Housing Finance and DHFL were down over 9 percent.
Maruti Suzuki, HDFC, Yes Bank and ICICI Bank crashed while TCS and Infosys bucked the trend on rupee fall.

HEADLINES OF THE DAY

RBI to introduce framework for efficient benchmarks in financial markets.
Indian rupee hits record low of 74.22/USD as RBI keeps rates unchanged.
RBI Policy: MPC keeps repo rate unchanged at 6.50%.
The crucial resistance for Nifty spot is now seen at 10480 and above this 10650 Support for the immediate term is now placed at 10200 next support will be 10090.

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