D-Street Wipes Out All 2018 Gains

Bloodbath In D-Street Wiped Out All 2018 Gains As RBI Hold Rates At 6.5%

Our Analysis

The stock market witnessed a bloodbath due to the increase in Rupee (74/$) among other major factors. Adopting the Calibrated Tightening stance the RBIs kept the rate of 6.5% unchanged, higher crude oil prices and the governments decision to cut Rs.1.5 in excise duty as well as asking OMCs (Oil Marketing Companies) to cut Rs.1 which triggered sharp selloff in OMCs including Reliance. Sensex & NIFTY both wiped out all 2018 gains as they fell over 2,000 & 700 points respectively this week. Almost all sectoral indices remained under pressure.
Liquidity concerns in NBFCs, issues of IL&FS, further rupee depreciation, rising crude oil prices, trade tariff war all is not going to help Indian market in coming times as well, though as Q2 FY19 earnings will start with TCS next week, can defy the market mood going ahead.

This Weeks Market Highlights:

Benchmark Indices:

1. Market started the month of October on a strong note as after opening losses market bounced back with Sensex surging 299 points & NIFTY above 11K.

2. A relief rally in financials pushed indices higher, while auto, metals & IT names ended in the green. Midcaps, too, recovered sharply to close 131 points higher.

3. On Wednesday a sharp selloff dragged equity market lower as Sensex dipped 550 points while NIFTY closed below 11,900.

4. Barring metal all other sectoral indices closed in red led by auto, FMCG, IT, banking & Financials. Midcaps too corrected with market, closed 200 points lower.

5. On Thursday, Sensex lost over 800 points while NIFTY closed below 10,600.

6. All sectoral indices closed in red led by OMCs, Energy, banking & financials, FMCG, metal. NIFTY midcap index also witnessed carnage, lost over 2%.

7. On Friday, Sensex lost nearly 800 points while NIFTY closed near 10,300 post RBIs policy outcome.

Broader Index & Global Market:

- This week the broader market too witnessed the carnage barring the first day of October led by NIFTY midcap & smallcap which corrected 6-9%. On the sectoral indices banking & financials, auto, pharma, energy, realty, IT, metal, media & FMCG all index corrected 2-10% due to overall selloff in market.

- This week US market hit new highs but corrected to this week low due to high bond yields. European market also corrected due to higher dollar & higher crude oil prices. Asian market continued to correct on the fear of trade war concern despite Chinese market closed. Crude Oil price traded at new 4-year highs & fear of growth also weighed market. US CPI, GBP GDP, Crude oil prices will be an event to watch.

Movers & Shakers

Shares of Yes Bank rallied over 17% this week after the management in its conference call looked confident about healthy growth in Q2 & said the succession planning for new MD & CEO is underway. Most of the brokerage houses continued to be positive after the bank commentary & expect as much as 114% upside in the stock after recent correction due to RBI decision.

Share of Oil Marketing company HPCL tanked over 30% this week after the Govt. announced Rs.2.50 per litre cut in petrol and diesel prices as it reduced excise duty and asked oil companies to absorb another Rs.1. After this move most of the brokerage firms downgraded the oil stocks as they expect on annualised basis PBT may drop by about Rs.9,000 crore based on current sales volumes.

Key Market Drivers

Key Takeaways From RBI MPC Outcome

  • MPC keeps repo rate unchanged at 6.5 percent
  • MPC changes stance from neutral to 'calibrated tightening'
  • Repo rate kept unchanged by a 5-1 vote; Chetan Ghate voted for a rate hike
  • Stance changed by a vote of 5-1; Ravindra Dholakia voted for a neutral stance
  • RBI proposes voluntary retention route for FPIs in debt markets
  • Inflation projected at 3.9-4.5% in H2 & 4.8% in Q1 of financial year 2019-2020
  • GDP growth seen at 7.4% in FY19 & 7.6% in FY20

The growth of Indias infrastructure industries slowed to 4.2% in August as compare to 7.3% in August & 4.4% in August last year. The Nikkei India services Purchasing Managers' Index, or PMI, fell to 51.6 in September. Despite a slight improvement in the manufacturing sector, the index recorded its lowest level in four months. The Nikkei India Manufacturing Purchasing Managers Index, or PMI, increased slightly to reach 52.2 in September from 51.7 in August.

Event Watch

Indias CPI for Sept. (YoY), IIP for Aug. (YoY), Manufacturing Output for August (MoM) & Forex Reserve data will be on October 12th 2018.

Q2 FY19 Result:- TCS, Tata Elxsi, Bandhan Bank, ZEEL, GM Breweries, Karnataka Bank, Tata Sponge, Avenue Supermarts, AU Small Finance bank.

Global:- US Core CPI, CPI, Trade Balance, PPI data will be next week.

Stocks To Watch

Titan Company Ltd. is on the upside while BPCL Ltd. is on the downside.



Niveza Editorial Desk : We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells everyday to a pave a smooth road for our clients in the shaky world of stock market. While tracking the mood swings of the market we bring our clients the most rewarding deals.



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