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Indian Indices End Flat on Policy Day; Telecom and Auto Stocks Witness Buying
Thu, 7 Feb Closing

Indian share markets volatility during market closing hours and ended the day on a flattish note. Stocks from the auto sector, telecom sector and healthcare sector witnessed buying interest, while stocks from the energy sector and power sector were trading in the red.

At the closing bell, the BSE Sensex stood lower by 4 points (down 0.01%) and the NSE Nifty was up by 7 points (up 0.1%). The BSE Mid Cap index closed up by 0.7%, while the BSE Small Cap index ended the day up by 0.8%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood up by 0.2% and the Nikkei was trading down by 0.6%. The Shanghai Composite was trading up by 1.3%.

European markets were also trading on a mixed note. The FTSE 100 was up by 0.1%. The DAX was down by 0.5% while the CAC 40 was down by 0.3%.

The rupee was trading at 71.40 to the US$ at the time of writing.

Speaking of Indian stock markets, note that the current scenario in the Indian stock market looks very similar to 2013.

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Back then, mid and small cap stocks witnessed a similar correction while the Sensex stayed put. This is evident in the chart below:

Is It 2013 All Over Again?

Here's what Tanushree Banerjee wrote about this in today's edition of The 5 Minute WrapUp...

  • 2018-19 has also followed a similar pattern.

    Long term-capital gains tax was introduced in last year's budget. We've seen corporate governance issues leading to auditor exits and finally the IL&FS impact..

    Also, with elections around the corner, the volatility will probably get worse.

    If you're looking at stocks from a short-term perspective, there is a good chance this volatile market will hurt you.

    But if you're picking stocks, thinking long-term, the potential for India is huge.

The investor who catches these above trends early, will create life-changing wealth for himself.

Market participants were closely tracking the Reserve Bank of India's (RBI) monetary policy meet today. The RBI has cut the repo rate by 25 basis points in its sixth bi-monthly monetary policy statement for 2018-19.

The central bank also changed the stance of the monetary policy to 'neutral' from 'calibrated tightening' as inflation being lower than its target for 5 consecutive months.

The MPC was headed by RBI Governor Shaktikanta Das. In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5% and the reverse repo rate at 6.25.

RBI governor said that the central bank is focusing more on addressing growth issues and that a shift in RBI policy stance to neutral also provides flexibility to meet growth challenges.

The RBI Governor said the headline inflation will be contained near the mandated 4% target.

Shaktikanta Das also said that the government's open market operation and liquidity infusion would depend on the evolving situation and based on requirement, the RBI will make sure there is no scarcity of liquidity.

Note that in 2016, the RBI adopted an inflation target of 4% (+/-2%) for next five years under the monetary policy framework.

However, since August last year, inflation has stayed below RBI's target of 4%.

In fact, in December, CPI-based retail inflation declined to an 18-month low of 2.2%.

Several events have happened in the past few months with inflation reaching a record low and persistent liquidity deficit which are witnessed in the banking system which was supported by the RBI. Real interest rates in India are among the highest in Asia.

The developments that the above rate cut brings in the economy remains to be seen. Meanwhile, we will keep you updated on all the happenings from this space.

In the news from macroeconomic space, as per a leading financial daily, the government is planning to make its employment survey index-based to get a sense of jobs generated every quarter and widen base to include all organisations.

The above move was triggered on the back of the recent leak of a National Sample Survey Office (NSSO) report and debates on whether the Employees' Provident Fund Organisation (EPFO) payroll data reflects new jobs created and greater formalisation of the workforce.

As per the news, the labour minister has asked top officials of his department to assess changes that can be brought in the quarterly employment survey (QES) to make it holistic.

The government is of the view that QES in its current form has several limitations, primary being absence of units registered after 2014. This is because it is based on the sixth economic census (2013-14) and does not cover establishments with less than 10 workers.

As a result, the quarterly employment survey effectively captures employment size of just about 24 million workers as against the total workforce of about 470 million.

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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