ALL EYES ON RBI

ALL EYES ON RBI

WORLD MARKETS

US indices rose 0.5%-0.6% to break three-day losing streak after a news report from Bloomberg that said the U.S. and China were edging closer to a trade deal. President Trump also said that trade talks with China were going well.

On the flip side, France and the wider European Union have promised to retaliate against potential U.S. tariffs on French goods. Also, the U.S. Commerce Secretary Wilbur Ross said the Trump administration has not ruled out imposing tariffs on imported European autos, despite not announcing a decision in November on whether to put additional levies on cars in the region.

Data from ADP and Moody’s Analytics showed private payrolls rose by just 67,000 last month, well below an estimate of 150,000.

WTI crude futures surged $2.33, or 4.2%, to $58.43 a barrel while Brent crude futures gained $2.31, or 3.8%, to reach $63.14 on the back of larger-than-expected drop in U.S. inventories and hopes of deeper production cuts from OPEC lifted prices.

European markets gained 0.4%-1.5%. A final reading of IHS Markit’s euro zone composite PMI came in at 50.6.

AT HOME

After falling about half a percent, benchmark indices saw a sharp reversal in late noon trade to end higher by four tenth of a percent, with Nifty breaking three day losing streak. Sensex settled at 40850, up 175 points while Nifty added 49 points to finish at 12043. BSE mid-cap and small-cap indices rose 0.5% and 0.3% respectively. BSE Metal index climbed 1.4%, becoming top gainer among the sectoral indices, followed by 1.4% higher Bankex and IT indices. Capital Goods and Energy indices were the top losers, down 1.3% and 1.1% respectively.

FIIs net sold stocks and index futures worth Rs 781 cr and 736 cr respectively but net bought stock futures worth Rs 393 cr. DIIs were net buyers to the tune of Rs 904 cr.

Rupee appreciated 14 paise to end at 71.52/$.

The Cabinet approved the launch of Bharat Bond Exchange Traded Fund or ETF, which would be be the first corporate bond ETF in the country.

OUTLOOK

Today morning, Asian markets are trading with gains of 0.3%-0.9% and SGX Nifty is suggesting a marginally lower start for our market.

In yesterday's report, we had said that 11883, the bottom made on 22nd November, continued to be next support to eye and that 12070, the top made on Tuesday, was the immediate hurdle, with the stop-loss of which, trading shorts could be held on to.

Nifty, after touching a low of 11935, rebounded sharply to touch a high of 12055 before closing at 12043.

12070, the top made on Tuesday, continues to be immediate hurdle, upon crossover which, 12159, the top made last week, would be next target/resistance to eye.

11883, the bottom made on 22nd November, continues to be downside support to eye.

Meanwhile, traders are advised to keep stop-loss of 12070 in short positions.

RBI's monetary policy committee, at the end of its three-day meeting, is widely expected to cut repo rate by 25 bps to 4.9%, marking sixth straight rate cut this year. Markets will also watch out for RBI’s assessment on growth and inflation as well as future rate hikes.