NEW DELHI: Amid concerns over declining growth rate and a slowing economy, investors in the Indian equity market are eagerly awaiting the Reserve Bank of India (RBI) Monetary Policy Committee's (MPC) decision on lending rates. The MPC of the RBI, which will meet today to review te economic situation and suggest measures to boos the struggling economy, is expected to announce its decision on a rate cut on Thursday.
There are high expectations that the RBI will go for a rate cut post its monetary policy meet. The top bank slashing the lending rates would boost the equity indices.
If the Reserve Bank of India (RBI) cuts the repo rate on Thursday, it would be the sixth reduction in the short-term lending rate in 2019. The resolution of the MPC will be placed on the website of the RBI at 11.45 AM on December 5. In five reductions in 2019 so far, the repo rate has been lowered by a total of 135 basis points over concerns that growth momentum is slowing down and also to try to boost liquidity in the financial system.
The GDP growth slowed sharply to more than six-year low of 4.5 per cent in the July-September, hit by a slump in manufacturing output, which contracted by 1.0 per cent. The pace of GDP growth moderated from 5 per cent in April-June and 7 per cent in the July-September quarter of 2018.The RBI may cut interest rates again to support growth, bankers and experts said. RBI has cut interest rates on every single occasion the multi-member monetary policy committee has met since Shaktikanta Das took over as the Governor of RBI in last December.
"Market is cautiously awaiting RBI monetary policy meeting to be held tomorrow where it expects the central bank to deliver its sixth rate cut of the year despite higher inflation. 25 bps rate cut is already factored in by the market and thus investors would watch out for any surprise on that front and the commentary on the future path," said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
He added that globally, sentiments have turned positive with US and China inching close towards the trade deal and investors would watch out for further development on that front.
On Wednesday too, reports of the US and China nearing a trade pact helped the indices revive in the last hour of trade.
After a largely, subdued trade, the S&P benchmark BSE Sensex on Wednesday closed at 40,850.29, higher by 174.84 points or 0.43 per cent from the previous close of 40,675.45 points.
It had opened at 40,606.01 and touched an intra-high of 40,886.87 points and a low of 40,475.83 points.
The Nifty50 on the National Stock Exchange closed at 12,043.20, higher by 49 points or 0.41 per cent from its previous close.
"Equity market bounced back in green towards the last leg of the market after being range-bound throughout the day. Market sentiments turned positive post the news that US and China were closer to signing trade deal despite heated rhetoric," Khemka said.
He added that on the sectoral front, all the indices ended in the green, except realty. |
