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Taking Stock: Rate cut hopes help market cut losses; Sensex, Nifty close flat

December 02
18:06 2019

The Indian market consolidated in a narrow range but dips were mostly bought into as sentiment remained upbeat in anticipation of another rate cut by the Reserve Bank of India (RBI).

The Monetary Policy Committee (MPC) will cut interest rates for the sixth straight time on December 5 to support growth that has continued to slip to more than six-year low, suggest experts.

GDP growth slowed sharply to a pace of 4.5 percent in the July-September, hit by a slump in manufacturing output, which contracted by 1.0 percent. The pace of GDP growth has moderated from the 5 percent rate in April-June.

Here is the final tally on D-Street – the S&P BSE Sensex rose 8 points to 40,802 while the Nifty50 closed 7 points lower at 12,048 on December 2.

Sectorally, the action was seen in telecom, energy, and metals while profit booking was seen in auto, IT, and healthcare stocks.

The broader markets underperformed as the S&P BSE Midcap index fell 0.77 percent while the S&P BSE Smallcap index was down 0.39 percent.

Weak Q2GDP data which hit a 6-year low and subdued auto sales numbers is likely to impact the investor sentiments in the short-term, but investors are hoping for a rate cut by the Reserve Bank of India (RBI).

“Despite positive sentiment in the global market due to better than expected manufacturing data in China, the domestic market traded range-bound on account of weak GDP, auto sales and ahead of the RBI’s monetary policy this week,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“But, market hopes for further stimulus and ease in interest rates to revive the slowing economy. Weakness was broad-based while telecom stocks jumped on account of aggressive tariff revision,” he said.

Top Nifty gainers: Grasim Industries, JSW Steel, and Bharti Airtel were up 2-4% respectively

Top Nifty losers: Bharti Infratel, Eicher Motors, and YES Bank were down 3-7% respectively

Stocks & Sectors:

Sectorally, the S&P BSE Telecom index rose 2.6 percent, followed by the Energy index which was up 1.2 percent, and the Metal index rose 0.3 percent.

On the losing front, the S&P BSE Auto index fell 0.94 percent, followed by the S&P BSE IT index which was down 0.85 percent, and the S&P BSE Healthcare index was down 0.62 percent.

Volume spike of 100-400% was seen in stocks like Bajaj Finance, Eicher Motors, Sun TV, NIIT Technologies, Idea Cellular, and Tech Mahindra.

Long Buildup: Indiabulls Housing Finance, Idea, RBL Bank

Short Buildup: Glenmark, Yes Bank, Torrent Pharma, Sun TV

Stocks in News

YES Bank ended over 6 percent lower after the company decided to raise up to $ 2 billion through the preferential allotment.

The share price of telecom stocks including Bharti Airtel and Vodafone Idea jumped 4-13 percent after the companies raised prices of their prepaid voice and data services.

Share price of Jagran Prakashan surged over 7 percent after the company announced a buy-back plan.

Following November auto sales numbers Nifty Auto shed close to a percent led by Eicher Motors (down 5 percent), Hero MotoCorp and Maruti Suzuki both down 1 percent. Other major losers were MRF, TVS Motor, Exide, Bosch and Bajaj Auto.

Technical View:

Nifty50 formed a bearish candle on the daily charts for the 2nd consecutive day in a row

Chart pattern suggests that the index is vulnerable to a selloff

In the near term critical support for the index is placed around 13-Day exponential moving average placed around 12,006 levels, and below that 11,800 will act as support.

Upsides shall remain capped around 12,160 unless Nifty manages a strong breakout above the said level. Traders for time being are advised to remain neutral on long side and look to short this market on a close below 12,000 levels, suggest experts.

Three levels to watch on Tuesday: 12006, 12137, 12200.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.

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