We're seeing early sign of exhaustion in Nifty and possibility of profit taking or consolidation is high now. However, the overall trend will remain positive and there'll be no shortage of trading opportunities on stock specific front. We suggest using any intermediate correction for accumulating quality stocks on dips. Nifty has strong support at 9,900. Plan your trades accordingly
RBI has been facing this challenge of non-transmission for a while, but a silver lining is developing at the macro level where the Forex reserves of India are becoming big. Large forex reserves eventually will ensure fall in currency premiums and that will result in foreign capital flowing into the economy at substantially lower rates. This will happen as global borrowing rates are subdued and currency risks now tapering off will result in lower rates offered in India.
Markets are overheated but reluctant to fall, a huge pile of cash getting built in the system and waiting to be deployed, that will act as a shock absorber at every weakness. We think long term money should be committed at these levels as well. Barring any global event, the outlook is positive
4:05 PM
NOMURA ON RBI POLICY
Overall, the RBI’s rate decision and its neutral stance are in line with expectations. The neutral stance suggests that the RBI’s decision-making remains data-dependent.
Looking ahead, we expect GST-related growth weakness in June/July and a gradual recovery after August, aided by a resumption of production (after initial GST hiccups), ongoing re-monetisation, normal monsoons and easier financial conditions (lower lending rates, ample liquidity).
Headline inflation bottomed in June and we expect it to rise gradually to above the medium-term target of 4% on higher food prices and statistical factors (HRA increases, adverse base effects). Given our expectation of both growth and inflation rising over the next six to 12 months, we expect a prolonged pause from the RBI
4:05 PM
AMBIT CAPITAL ON RBI POLICY
We expect the RBI to administer 25-50bps of rate cut from hereon over the rest of FY18. Even as CPI inflation is expected to trend higher in 2HFY18, we expect expect the RBI to cut rates from hereon mainly because: (1) the Central Government’s net spends have been heavily front-loaded and hence will slowdown from hereon thereby requiring monetary policy to play a more growth-supportive role and (2) meaningful pressure is being exerted by the Ministry of Finance on the RBI to cut rates
Given the soft PMI numbers and concerns over GST hassles markets have been expecting a deeper cut, especially as inflation expectations had eased. So it was not surprise that markets looked underwhelmed after RBI’s 25bps cut. Rise in volatility index and FII's restrained approach over last few trading sessions have also been testing investor sentiments.
4:03 PM
Deepak Jasani, Head- Retail Research, HDFC Securities on RBI policy
While the 25 bps repo rate cut was in line with consensus expectations, the neutral policy stance of the MPC may disappoint some market participants. A 25 bps rate cut in itself will not result in a large fall in interest expenses for the businesses, therefore, an indication or hint about the future speed and time of rate cuts could have helped sentiments across the board; though the compulsions of the RBI's MPC are well appreciated at this point. Availability of credit may be more important than its cost in times when a large section of the business community is undergoing stress. While the markets may react in a knee-jerk fashion in the extreme near-term, in a day or two, it may come back on its original path, which seems upwards atleast for the next 2-3 weeks.
3:52 PM
Sectoral trend
All sectoral indices settled in negative.
Source: NSE
3:49 PM
Top Sensex gainers and losers
Source: BSE
3:46 PM
Rate-sensitives end lower
Stocks of rate-sensitive sectors such as financials, automobiles and real estate ended lower. Nifty Bank and Nifty Auto shed 0.2%, while Nifty Auto closed 0.3% lower.
3:42 PM
Market breadth remains negative
The breadth, indicating the overall health of the market, was negative. On the BSE, 1,594 shares fell and 1,063 shares rose. A total of 176 shares were unchanged.
3:40 PM
In the broader market, the BSE Midcap shed 0.3%, while the BSE Smallcap settled little changed.
3:39 PM
Markets at close
The Sensex settled at 32,476, down 98 points, while the broader Nifty50 closed at 10,081, down 33 points.
3:36 PM
COMMENT: Radhika Rao, India Economist, DBS Bank
Today’s policy statement is not a game-changer for the markets, with a neutral central bank to keep interest rate differentials in favour of the economy and thereby fueling foreign investor interests. One needs to differentiate between liquidity management and the rate direction, which might over the course of the coming months move in opposite directions.
Whilst rates might be lowered in response to benign inflation, liquidity might continue to be drained to ensure the operating rate target is close to the policy rate
3:26 PM
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services on RBI policy
We understand that the rate cut decision was not consensual. One member wanted a 50 bps cut in rate while another was in favour of a pause, while four members wanted a 25 bps cut. So, finally we got a 25 bps cut by a vote of 4 to 2.
An important point to note is that the RBI has not changed the policy stance, which continues to be neutral. A shift to ‘accommodative' stance would have been better. To that extent, the decision is disappointing. It is important to note that India has the second highest real interest rate in Asia presently. This is detrimental to credit expansion and economic growth.
The RBI governor expressed concern that CPI inflation might inch up to 4% by Q4. Perhaps they might cut again when CPI inflation undershoots their estimates, which has been the case in the recent past.
3:22 PM
Rupee surges to two-year high
The rupee rose to as much as 63.7575 per dollar, its strongest level since Aug. 10, 2015, from its close of 64.0750 on Tuesday. READ MORE
The benchmark indices ended lower after the Reserve Bank of India (RBI) cut repurchase (repo) rate by 25 basis points (bps) to 6%, the lowest since November 2010. The Sensex and Nifty had hit their respective highs of 32,686 and 10,137, respectively at open.
The rate cut came after a slump in food prices sent June consumer inflation to a more than five-year low of 1.54%, well below the RBI's 4% target and its projection of 2.0-3.5% for April-September.
Overseas, European markets ebbed lower as energy shares pulled back after a drop in oil prices, while Asian markets ended mixed after Asian technology stocks hit 17-year peaks. On wall Street, E-Mini futures for the Dow were up 0.2%, suggesting the Dow index may open above 22,000 points later today.
 "RBI rate cut fails to cheer markets; Nifty ends below 10,100 mark")
