Share markets in India are presently trading on a volatile note after the Reserve Bank of India's monetary policy committee (MPC) reduced the repo rate by 25 basis points (bps) to 5.15%.
Sectoral indices are trading mixed with stocks in the FMCG sector and consumer durables sector witnessing selling pressure, while IT stocks and automobile stocks are witnessing buying interest.
The BSE Sensex is trading down by 30 points while the NSE Nifty is trading down by 16 points. The BSE Mid Cap index is trading down by 0.1%, while the BSE Small Cap index is trading up by 0.1%.
The rupee is currently trading at 70.87 against the US$.
In news from the banking sector, the Reserve Bank of India (RBI) cut its benchmark interest rates for the fifth time this year to boost economic growth. The RBI cut repo rate by 25 basis points to 5.15%, which takes its cumulative cuts so far this year to 135 bps.
The six-member MPC decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.
The MPC also sharply reduced its growth forecast for the fiscal year 2019-2020 to 6.1% from 6.9% earlier. The committee noted that risks to growth have emerged due to weak domestic demand and sagging export prospects on account of continuing trade tensions.
On the other hand, it retained its consumer price inflation forecast for the second half of the fiscal year 2019-202 as expected at 3.5%-3.7%.
--- Advertisement ---
Investment in securities market are subject to market risks. Read all the related documents carefully before investing
Rare Money-Making Trend Returns to Indian Markets
After 2 Decades
Discover more
Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com
---------------------------------------------------
In other news, the RBI on Thursday increased the withdrawal limit for Punjab and Maharashtra (PMC) Bank customers to Rs 25,000 from Rs 10,000.
In a press release, it said "the Reserve Bank of India again reviewed the bank's liquidity position and, with a view to reducing the hardship of the depositors, has decided to further enhance the limit for withdrawal to Rs 25000."
In a relief for customers caught unaware by the sudden curbs on the co-operative bank, the new limit will allow 70% of the bank's depositors to withdraw all of their money, the central bank said in a statement.
RBI also said that it has decided to appoint a three-member committee to assist the RBI-appointed administrator of the bank.
On 23 September, the RBI barred PMC bank from carrying out any operations for the next 6 months. It had initially capped the deposit withdrawal at Rs 1,000 per account which was relaxed to Rs 10,000 in two days and now stands at Rs 25,000.
The above developments came into effect after the central bank found certain irregularities in the bank, including under-reporting of NPAs and large deposit withdrawals.
Note that the recent Punjab and Maharashtra bank fiasco has put small savers in the limelight yet again.
These banks have poor lending practices. Depositors have had to pay the price time and again.
--- Advertisement ---
Investment in securities market are subject to market risks. Read all the related documents carefully before investing
Want to Grow Your Wealth With Safe Stocks?
Access Our Premium 'Low Risk, High Return Potential' Stock Research at Rs 2,050 Off
Full Details Here
Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com
---------------------------------------------------
In the short run, this has an adverse effect on microfinance lending as well. Micro finance institutions (MFIs) are skeptical about lending to even genuine borrowers in an uncertain environment.
But this is actually a blessing in disguise for MFIs with strong business practices.
After all, last mile connectivity in lending is still a huge opportunity.
Here's what Tanushree Banerjee wrote about this in a recent edition of The 5 Minute WrapUp...
A private bank that is part of Tanushree's 7 stocks to buy list has already taken a step in this direction.
It will be a big beneficiary when the microfinance boom plays out in India.
Moving on to news from the pharma sector, Alembic Pharma's joint venture (JV) Aleor Dermaceuticals has received approval from the US Food & Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) Clobetasol Propionate Spray, 0.05%.
The approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Clobex Spray, 0.05% of Galderma Laboratories L.P.
Clobetasol Propionate Spray, 0.05% is indicated for the treatment of moderate to severe plaque psoriasis affecting up to 20% body surface area (BSA) in patients 18 years of age or older.
It has an estimated market size of US$ 22 million for twelve months ending December 2018.
Alembic Pharma has a cumulative total of 103 ANDA approvals (91 final approvals and 12 tentative approvals) from USFDA.
Alembic Pharma share price is presently trading up by 5.4%.
To know more about the company, you can read Alembic Pharma's latest result analysis and Alembic Pharma's 2018-19 annual report analysis on our website.
And 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!
Read the latest Market Commentary
Equitymaster requests your view! Post a comment on "Sensex Trades Flat; RBI Cuts Repo Rate by 25 bps". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!