The Repo Rate Hike: Inflation Gave the Cover, the Rupee Gave the Reason

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SumanSpeaks Independent Capital Markets & Geopolitical Intelligence RBI Policy Decoded The Repo Rate Hike: Inflation Gave the Cover, the Rupee Gave the Reason The RBI raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026. With the rupee at ₹96.78 to the dollar, the Fed at 3.75–4.00 percent and bank credit growing near 18 percent, the fuller story is bigger than August CPI of 4.8 percent. The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026. It is the first hike since February 2023, and the stance has moved from neutral to calibrated tightening. The rate decision was unanimous. The Governor cited inflation. The Monetary Policy Committee said the inflation outlook is no longer as comfortable as it was last year, and near-term rate cuts were taken off the table. That is the official story, and it is not wrong. But it is incomplete. Look at what surrounds the decision: a rupee near its record...
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Market Pulse
Domestic stocks saw gap-down opening taking cues from negative Asian stocks. At the time of writing this report, the barometer index, the S&P BSE Sensex, was down 228.07 points (-0.68%) and Nifty was down 73.35 points (-0.71%) and were trading at 33,374.69 and 10,287.35 respectively.

The S&P BSE Mid-Cap index was down 0.3%. The S&P BSE Small-Cap index was down 0.35%. The fall in both these indices was lower than the Sensex's decline in percentage terms.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 921 shares fell and 502 shares rose. A total of 47 shares were unchanged.

Market may remain volatile as traders roll over positions in the futures & options (F&O) segment from the near month November 2017 series to December 2017 series. The November 2017 derivatives contract expire today, 30 November 2017.

Overseas, Asian stocks fell as investors ponder the longevity of the global equity bull run. China's official non-manufacturing purchasing managers' index, a measure of activity outside factory gates, rose to 54.8 in November from 54.3 in October, the National Bureau of Statistics said today, 30 November 2017. The official manufacturing PMI, also released today, 30 November 2017 rose to 51.8 in November from 51.6 in October.

In US, the Dow Jones Industrial Average closed at a new high yesterday, 29 November 2017 even as the Nasdaq Composite logged its worst day in three months as a selloff in megacap technology shares, such as Facebook Inc., Apple Inc., and Amazon.com Inc., weighed on the tech-heavy index.

The Federal Reserve released the Beige Book, a compilation of anecdotes on the US economy. In the report, the Fed said it detected a slight improvement in the outlook among contacts in its 12 districts with growth remaining at a modest to moderate pace. The central bank has also witnessed strengthening in inflation pressures over the past month with increases passed on the consumers.

In economic news, the US economy's pace of growth in the third quarter was raised to 3.3% from 3% under the government's latest revision to gross domestic product. Pending-home sales jumped 3.5% in October, but remained 0.6% lower than a year ago.

On the macro front, the government will announce Q2 September 2017 gross domestic product (GDP) data after market hours today, 30 November 2017. India's GDP growth rate slowed to 5.7% in Q1 June 2017, on the back of destocking ahead of Goods and Services Tax (GST) implementation.

India's infrastructure output data for the month of October 2017 is also scheduled to be released after market hours today, 30 November 2017. India's eight core infrastructure sector, carrying 40.27% of the weight of items included in the index of industrial production (IIP), had shown a healthy 5.2% increase in its output in September 2017 over September 2016.

Today's Calls:
#Buy EURINR around 76.81, SL below 76.70, T: 76.92.

#Book Part Profit in Hexaware Technologies at around Rs.340.50. Yesterday, a short term momentum buy call was initiated in Hexaware Technologies Ltd on T+1 basis at around Rs.334-335, SL: Rs.328,  T: Rs.344. The company's Q2FY18 consolidated net profit rose 16.4% qoq beating street Estimates. Revenue for the quarter came in line with the estimated figure of Rs.989 crores. EBITDA for the quarter came in 7.2 % higher than the estimated figure of Rs. 161.6 crores. And lastly, net profit for the quarter came in 19.6% higher than the estimated figure of Rs.118.94 crore.

#Accumulate Subex Ltd at around Rs.9.70, for targets of Rs.12-15. The stock is showing some temporary weakness due to a sell off in the technology shares yesterday, in the US.

#Intraday, SELL Cadila Healthcare Ltd at around Rs.432, SL: Rs.437, T: Rs.424. Cadila Healthcare and The Indian Council of Medical Research (ICMR) announced the launch of new diagnostic kits, developed by ICMR's National Institute of Virology (NIV), Pune to detect neglected infectious diseases in livestock. This public private partnership will open newer avenues for many more indigenously diagnostics for public health benefits. The announcement was made at the fag end of trading session yesterday, 29 November 2017. EXIT around Rs.429.75.

#Buy Britannia Industries Ltd's December FUTURES on declines at around Rs.4870, SL: Rs.4830, T: Rs.4950. Britannia Industries, incorporated in the year 1918, is a Large Cap company (having a market cap of Rs.58,468.81 Crore) operating in Food Processing sector. Britannia Industries Ltd’s September quarter results suggest a gradual improvement subsequent to the roll-out of the goods and services tax (GST). Its stand-alone results show sales rose 7.8% from a year ago, compared with the June quarter’s 6.6%.
The company management had said in July, in a conference call after the June quarter, they expect sales growth to return to double digit levels only after a quarter or so. That is playing out. 

#Buy LEAD around Rs.156.40, SL below Rs.155, T: Rs.159.00 on T+1 basis.

~ with inputs from Capital Market - Live News..

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