Falling Crude Oil Prices, RBI's Repo Rate Cut, and Top Stocks in Action Today

Thu, 8 Aug Pre-Open

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On Wednesday, Indian share markets fell sharply during closing hours and ended lower. The BSE Sensex closed lower by 286 points to end the day at 36,691. Tata Motors and Tata Steel were among the top losers.

While the broader NSE Nifty ended down by 93 points to end at 10,856.

Among BSE sectoral indices, metal stocks fell the most by 2.7%, followed by automobile stocks and energy stocks.

Top Stocks in Action Today

Mphasis share price will be in focus today as the company has signed a multi-year deal with Ardonagh Group, UK's largest independent insurance intermediary with global reach.

To know more about the company, you can read Mphasis' latest result analysis on our website.

Thomas Cook share price will also be in focus today as its wholly owned subsidiary - Horizon Travel Services LLC, USA has acquired 51% stake in Digiphoto Entertainment Imaging LLC, USA.

Market participants will also track Page Industries share price, Tata Chemicals share price, and Abbott India share price as these companies will announce their June quarter results later today.

Results Corner

Cipla has reported 77.7% rise in its standalone net profit at Rs 6.9 billion for the June quarter (Q1FY20) as compared to Rs 3.9 billion for the same quarter in the previous year. Total income increased by 7.4% at Rs 33.2 billion for Q1FY20 as compared Rs 30.9 billion for the corresponding quarter previous year.

Voltas has reported a fall of 11.1% in its consolidated net profit at Rs 1,663.2 million for the quarter under review as compared to Rs 1,870.6 million for the same quarter in the previous year.

Mahindra and Mahindra (M&M) reported a 26% decline in its consolidated net profit at Rs 9.2 billion for Q1FY20.

Reportedly, the fall in profit was attributed to sluggish domestic volume and increased cost pressure. The company had posted a profit of Rs 12.4 billion in the year-ago quarter.

Operational revenues for the quarter declined by 7% to Rs 260.4 billion against Rs 280.6 billion in the corresponding quarter of the previous fiscal. Operating profit margin contracted 180 bps to 14% in Q1FY20 from 15.8% in Q1FY19.

Indiabulls Housing Finance posted 24% year-on-year (YoY) drop in consolidated net profit at Rs 8 million in Q1FY20. It had a profit of Rs 10.6 billion in the year-ago quarter.

The company's total income fell to Rs 38.9 billion during the June quarter as against Rs 40.7 billion in the year-ago period.

You can read our recently released Q1FY20 results of some other companies here: Bata India, Venkys India, Berger Paints, Torrent Power, Kolte Patil.

From the Currencies Space...

On Wednesday, the rupee witnessed high volatility and slipped towards 71 level after the Reserve Bank of India cut repo rate by 35 basis points to boost the slowing economy.

The rupee had opened on a weak note at 70.92 at the interbank forex market, then fell further to 70.99 against the US$.

Following the RBI's Monetary Policy Committee (MPC) decision, the local currency witnessed heavy volatility. It fell to a low of 70.99 and a high of 70.88 within minutes of RBI policy decision.

RBI Cuts Repo Rate by 35 bps

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) announced a 35 basis points cut in repo rate in its third bimonthly policy review of this financial year. After the cut, the repo rate now stands at 5.40%.

The reverse repo rate now stands at 5.15%. The RBI press statement said four out of the six members of the MPC voted in favour of a 35 basis points (bps) rate cut in this monetary policy meet.

RBI in its release said global economic activity has slowed down since June 2019 MPC meeting amid elevated trade tensions and geopolitical uncertainty. RBI also trimmed India's GDP growth forecast for this financial year to 6.9% from 7% earlier.

The release also stated that the transmission of policy repo rate cuts to the weighted average lending rates (WALRs) on fresh rupee loans of banks has improved marginally since the last MPC meeting. Overall, banks reduced their WALR on fresh rupee loans by 29 bps during the current phase.

The apex bank projected CPI inflation at 3.1% for Q2FY20 and 3.5%-3.7% for the second half of FY20, with risk evenly balanced. The MPC noted that inflation is currently projected to remain within the target over a 12-month ahead horizon.

RBI governor Shaktikanta Das clarified that future policy actions will be dependent on upcoming data. He also said that NBFC loans to MSME sector up to Rs 20 lakh will get priority status. He also assured sufficient liquidity to all needy sectors.

Oil Prices Hit New 7-Month Lows

Oil prices fell further on Wednesday, extending recent heavy losses as deepening US-China trade tensions weighed on the outlook for the global economy and energy demand.

Brent crude futures were down 40 cents at US$ 58.54 a barrel, setting a fresh seven-month low. Prices have lost more than 20% since hitting their 2019 peak in April.

Brent has plunged more than 9% over the past week after US President Donald Trump said he would slap a 10% tariff on a further US$ 300 billion in Chinese imports from September 1, sending global equity markets into a tailspin.

Tensions in the Middle East remain high after Iran seized several tankers in recent weeks in the Strait of Hormuz, a major chokepoint for oil shipments.

Saudi Energy Minister Khalid al-Falih and US Energy Secretary Rick Perry on Tuesday expressed mutual concern over threats targeting freedom of maritime traffic in the Gulf.

The Energy Information Administration (EIA) lowered its domestic oil growth forecasts for the year after Hurricane Barry disrupted Gulf of Mexico output in July. Production is set to rise by 1.28 million barrels per day to 12.27 million bpd this year.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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