event highlights

Stock Market Highlights: The Indian market saw a surge in the final minutes of trade to register yet another record high. The Sensex ended 1 percent higher at 45,079 while the NSE Nifty 50 too gained 1 percent to end at 13,258. Today's session belonged to banking stocks. The Nifty Bank gained 300 points in the final hour of trade. The index surpassed the 30,000 level led by the announcements made by the RBI Governor on credit policy.

Dec 4, 2020

15:46

Closing Bell: Sensex ends above 45,000 for the first time ever, Nifty at record close; banks surge

Sensex crossed 45,000-mark for the first time on Friday, ending at record close after RBI upgraded its GDP target for the current fiscal year and kept interest rates steady in the face of stubbornly high inflation.

The Sensex ended 447 points higher at its closing high of 45,079 while the Nifty added 124 points to settle at its record close of 13,258. Both indices were also 2 percent higher for the week.

In intraday deals, Sensex rose as much as 515 points to hit its record high of 45,148 while the Nifty gained 146 points to its all-time high of 13,280.

Reserve Bank of India Governor Shaktikanta Das said India’s prospects have brightened with progress on COVID-19 vaccines and projected real GDP for the current financial year to shrink 7.5 percent from an earlier expectation of a 9.5 percent contraction.

The RBI kept the key lending rate unchanged at 4 percent. The central bank has already cut its key interest rate by a total 115 basis points this year to revive growth and cushion the impact of the pandemic.

Other sectors including pharma, metal, FMCG were also ended over a percent higher for the day.

On the Nifty50 index, Adani Ports, ICICI Bank, Hindalco, UltraTech Cement, and Sun Pharma were the top gainers while RIL, HDFC Life, Bajaj Finserv, BPCL, and HCL Tech led the losses.

Dec 4, 2020

15:10

Prakash Diwan, Market Expert

On UltraTech Cement

There is a very long-term secular trend that is underway and it is just starting for real estate and for infrastructure. So I don’t think the risk reward is so unfavourable. You could always add on dips to make it more comfortable in terms of your average acquisition cost but I think this is the stock that will hardly give you many dips. So you will start getting a feeling of being left out if you don’t because the valuations are not as yet so stretched. I think there is more leg to this rally.

On Bharti Airtel

You need just one trigger and that is going to be the price increase. If that were to happen, the ARPUs are going to start moving towards that magical Rs 300 mark. Once that happens, the stock will also start giving you a lot of visibility on earnings. My target on this is that it will probably cross Rs 600 in the next six-twelve months. You need to have that patience to hold on and see these ups and downs given the sentimental factors that could impact the stock but quite positive on it.

Dec 4, 2020

14:53

Dinesh Kumar Khara, Chairman, SBI

The RBI policy of maintaining the status quo was expected but the continued forward guidance of an extended accommodative stance will continue to serve the markets well. The upward revision of the FY 21 GDP growth rate to -7.5 percent emphasizes that the worst is behind us though we must remain watchful. The central bank announcement of the extension of on-tap TLTRO to stressed sectors is a perfect example of coordinated monetary and fiscal policy coordination, a hallmark of the current pandemic.

Allowing the RRBs to access the liquidity adjustment facility, will help RRBs to efficiently deploy and diversify their surplus funds and enlarge the reverse repo window. The move towards the strengthening of supervision of financial entities will right-size the three lines of defense in pursuit of an effective risk management framework. Measures such as digital payments supervision, deepening financial markets, and ensuring ease of doing business for export transactions are useful steps.

Dec 4, 2020

12:16

Amar Ambani, Senior President and Head of Research - Institutional Equities

In line with the expectations, RBI decided to stand pat on the policy rate and updated growth and inflation outlook given that inflation remains stubbornly high, while growth is gaining traction. The central bank scaled down on its earlier pessimistic GDP projection for FY21 as the frequency indicators and GDP data convey meaningful rebound in economic activity in both rural and urban demand. Inflation will remain as a hindrance for next two quarters and will dissuade further policy rate cuts at least for FY21. MPC did not unleash new on the non-interest rate tools, as significant measures (OMOs, TLTROs) have already been announced during the last policy meeting. The fact that liquidity remains high, while growth is gaining traction, makes us believe that RBI will adopt a wait and watch approach for next few months. Nevertheless, the MPC reiterated its accommodative stance given the transitional phase the economy is going through, in terms of recovery from the pandemic.

Dec 4, 2020

12:01

Bekxy Kuriakose, Head – Fixed Income, Principal Asset Management

RBI kept key rates unchanged and stance as accommodative. MPC noted that inflation is expected to remain elevated and this prevented them from cutting key rates further. RBI Governor in his live appearance once again underscored the success of measures taken since the Pandemic broke out and reiterated that Bond market conditions have evolved in an orderly manner. He assured the market that the various measures being used for stabilizing yields like gilt purchases through OMOs, OT (Operation Twist) etc will continue. The key statement which seems relevant is when he repeated that "All instruments will be used at appropriate time while ensuring ample liquidity is available to the system". Thus we expect that soon some liquidity tightening measures may be introduced in form of term reverse repos of higher tenors or T bills or any other facility to impound liquidity. Currently the NET LAF is close to Rs 6 lakh crores and some of this liquidity may be withdrawn.

Post RBI statement, gilt yields have softened 3-7 bps as there was relief on reassurance of continuation of OMO measures.

We would be cautious of short-term money market yields which pre-policy had fallen to record lows even below the reverse repo rate. We expect that on the introduction of liquidity tightening measures in coming days, yields mar rise in the upto 6-month segment by 10-25 bps.

Overall given the accommodative stance and RBI's continued focus for growth revival we would advise investors to keep a balanced asset allocation with core allocation to high-quality short-term debt category.

Dec 4, 2020

11:11

Lincoln Bennet Rodrigues, Founder and Chairman, Bennet & Bernard Group: The decision of the RBI to keep repo rates unchanged was taken due to signs of revival that the government has observed recently. In spite of very high contraction expectations, the government also highlighted many silver linings in the economy which gives hope for a better Q4 and FY 21-22.

The real estate sector is yet to see the full swing impact of various measures announced recently by the government and we feel that a rate cut now would have given some respite to the real estate sector which has been facing headwinds due to the pandemic. However, we are upbeat as consumer sentiment is high, especially after they witnessed the brittle nature of other investment vehicles compared to real estate. The post-pandemic world will be good for the real estate sector as it offers you the best bet – stability, security and safety. So, one must take advantage of the current scenario and invest with a long term perspective to ensure superior returns.

Real estate being a highly cost-sensitive sector, demand will only pick up if the bank rate cut is substantial and result in significant cost savings. Going forward, we feel that the interest rate should be reduced with firm liquidity measures as this is the need of the hour, backed by specific fiscal measures to give the much-required stimulus to the sector. The real estate sector employs the maximum number of people in the country after agriculture linking to 250 allied industries. We hope that the government continues to pay attention to the requirements of the sector, which is one of the largest employers in the country. We look forward to the Government’s constant support to help bring the real estate industry back to global forefront.