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Sensex Ends 334 Points Lower; Auto and Banking Stocks Witness Selling
Fri, 6 Dec Closing | Monish Vora, TM Team

India share markets witnessed huge selling pressure today and ended their day deep in the red.

At the closing bell, the BSE Sensex stood lower by 334 points (down 0.8%) and the NSE Nifty stood down by 96 points (down 0.8%).

The BSE Mid Cap index ended the day down 1.3%, while the BSE Small Cap index ended the day down by 0.9%.

Stocks in the auto sector and banking sector witnessed huge selling pressure, while telecom stocks were trading in the green.

The rupee was trading at 71.27 against the US$.

Asian stock markets finished on a positive note. As of the most recent closing prices, the Hang Seng was up by 1.07% and the Shanghai Composite was up by 0.43%. The Nikkei 225 was up 0.23%.

European markets were also trading on a positive note. The FTSE 100 was up by 0.67%. The DAX was trading up by 0.16%, while the CAC 40 was up by 0.39%.

Speaking of Indian share markets and the Indian economy, with the RBI keeping interest rates unchanged yesterday, the focus of market participants has now shifted to whether the RBI's rate cut will translate into better economic activity in the near term.

Like this chart shows, RBI rate cuts have always had a big gap with bank lending rates.

Yet Another RBI Rate Cut May Not Result in Lower Lending Rates

Yet Another RBI Rate Cut May Not Result in Lower Lending Rates

Here's what Tanushree Banerjee wrote about it in a recent edition of The 5 Minute WrapUp...

  • It will be a while before lower lending rates stoke the economy.

    Therefore, hoping for an immediate revival in the economy is futile. The RBI has no magic wand to do this.

    Rather look for stocks that can outperform irrespective of the RBI policy.

    I believe the cement sector may be a good place to start.

    One of my recent recommendations from the sector is a typical Rebirth of India stock.

    And I won't be surprised if it repeats its 2002-2006 performance.

Also, since we're on the topic of RBI rate cut...note that after the RBI's decision to keep repo rate unchanged, the Bank Nifty Index fell sharply.

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In the news from the commodity space, crude oil was witnessing buying interest today. Gains were seen as OPEC agreed to increase output curbs by nearly 50% in early 2020.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia agreed one of the deepest output cuts this decade to support crude prices and prevent a glut but were still debating how long the curbs would last next year.

For the aforesaid cuts, OPEC has discussed supply policy in Vienna and is also meeting with Russia and other producers, a grouping known as OPEC+.

The members will consider how to balance their supply with another year of rising output from the United States in 2020. Other non-OPEC countries such as Brazil and Norway are also expected to pump more oil.

Russian Energy Minister Alexander Novak said a panel of key energy ministers including Saudi Arabia and Russia had recommended the OPEC+ group deepens existing supply curbs of 1.2 million barrels per day by another 500,000 bpd.

The cut of 1.7 million bpd would amount to 1.7% of global crude oil supply.

He said cuts would last through the first quarter of 2020, a much shorter timeframe than suggested by some OPEC ministers, who have called for extending cuts until June or December 2020.

OPEC+ has agreed voluntary supply cuts since 2017 to counter booming output from the shale fields of the United States, which has become the world's biggest producer.

Note that Saudi Arabia needs higher oil prices to support its budget revenue and the pending initial public offering (IPO) of state-owned oil giant Saudi Aramco.

The state oil company Aramco launched its initial stock offering on Thursday, raising US$ 25.6 billion.

The sum raised by the oil giant surpasses the US$ 25 billion garnered by the Chinese online trading group Alibaba in 2014 when it entered Wall Street.

The IPO still falls short of the towering US$ 2 trillion valuations long sought by Crown Prince Mohammed bin Salman.

How the above output cuts will affect the crude oil markets and the Aramco IPO remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

In the news from the banking sector, Andhra Bank share price was in focus today. The stock of the lender witnessed selling pressure after the Reserve Bank of India (RBI) imposed a penalty of Rs 25 lakh.

Andhra Bank was fined for failing to comply with RBI's directions on know your customer (KYC) norms, anti-money laundering standards and opening of current accounts.

The bank has already taken necessary preventive measures, the state lender said in a filing to the exchanges.

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

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Stock Market Updates

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Jan 29, 2020 10:20 AM

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Jan 29, 2020 10:20 AM

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DIVIS LABORATORIES at All Time High; BSE HEALTHCARE Index Up 0.4% (Today's Market)

Jan 29, 2020 10:10 AM

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Jan 29, 2020 09:52 AM

NARAYANA HRUDAYALAYA LTD share price has hit an all time high at Rs 389 (up 6.1%). The BSE HEALTHCARE Index is up by 0.4%. Among the top gainers in the BSE HEALTHCARE Index today are NARAYANA HRUDAYALAYA LTD (up 6.1%) and SANOFI INDIA (up 0.4%). The top losers include ABBOTT INDIA (down 0.2%) and AJANTA PHARMA (down 0.4%).

INFO EDGE at All Time High; BSE IT Index Up 0.8% (Today's Market)

Jan 29, 2020 09:48 AM

INFO EDGE share price has hit an all time high at Rs 2,821 (up 1.5%). The BSE IT Index is up by 0.8%. Among the top gainers in the BSE IT Index today are INFO EDGE (up 1.5%) and ORACLE FINANCIAL (up 0.5%). The top losers include TCS (down 0.3%) and ECLERX SERVICES (down 1.8%).

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Jan 29, 2020 11:03 AM