Friday Market Update: Market welcomes RBI’s MPC outcomes

Markets at a Glance:

Bulls further stretched the markets over RBI MPC’s favourable outcome and took Nifty above 11900 levels and Sensex above 40500 levels. Sensex grew by almost 326 points, while Nifty rose by around 79 points.

Talking about sectors, Nifty Bank, Financial services and IT ended in green. On the other hand, Pharma, Realty, Media, FMCG, Metal and Auto took some beatings. Interestingly, India VIX, which measures fear in the market, ended flat at 20.38.

Top Gainers/Losers in today’s market:

Wipro, ICICI Bank, Axis Bank, SBI and HDFC Bank were among the top achievers in today’s session, while Grasim Industries, Hindalco, UPL, Sun Pharma, SBI Life Insurance were among the top losers.

DII/FII data of today’s market:

DII invested Rs.126.61 crore in today’s session, while FII took away a net amount of Rs.39.39 crore.

RBI MPC Outcome: Here are the key takeaways

• Key rates like Repo and reverse repo rates remain unchanged at 4% and 3.35% respectively.
• RBI predicts GDP to contract by 9.5%, while World Bank predicts 9.6% fall in FY21.
• GDP growth may turn positive by Q4 of FY21.
• More special OMOs to be conducted, with each tranche of Rs.20000 crore (Read more about OMOs here)
• OMOs will be conducted for State Development Loans (SDLs) also, which will keep borrowing rates low for state governments.
• RBI to conduct on tap TLTRO (Targeted Long Term Repo Operations) of Rs.1 lakh crore at floating rates linked to repo rate. TLTRO funds to be deployed in corporate bonds, debentures. This would help banks conduct operations smoothly and will ensure easy money supply for corporates.
• RBI predicts CPI inflation to stand at 6.8% for Q2 of FY21. It also expects that inflation will decline modestly over next three months.
• RTGS facility will be available 24hrs starting from December, 2020.
• RBI decided to rationalise the risk weights and to link them to Loan-to-Value (LTV) ratio only, not to loan amount for all new home loans sanctioned up to March 31, 2022. This move will make home loans cheaper for individual home buyers, without causing stress on bank’s balance sheets.
• RBI announced that it will extend the scheme of co-lending to all non-banking financial companies (NBFC) including HFCs. This would transfer some liquidity from banking space to NBFCs and allow greater operational flexibility to all lending institutions.
• RBI also said that kharif crop sowing has already surpassed last year’s average as well as the sown area, which means if everything remains well, there will be record agricultural produce this year.

AMFI Data shows a net fund outflow of around Rs.52000 crore from MF in September:

As per the latest data released by Association of Mutual Funds in India (AMFI), total outflow from all types of mutual funds in market stood at Rs.52000 crore in September month. Debt MF schemes got hit the most, as they witnessed a net outflow of almost Rs.50813 crore in September up from the outflow of Rs.3907 crore observed in August month.

There was some improvement in Equity oriented MF schemes, as their outflow reduced from around Rs.4000 crore in August to Rs.734 crore in September.

Read our Yesterday’s market update here.

Read our market predictions here.