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A morning walk down Dalal Street: All eyes on MPC meet outcome, market expects a rate cut

Analysts advise investors to remain cautious ahead of the outcome of the MPC meeting on June 6

June 06, 2019 / 07:17 AM IST
 
 
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It was a day of consolidation on D-Street on June 4 as the Nifty moved in a 100-point range. But, the good news is that Sensex held on to its crucial support at 40,000 while the Nifty50 also closed above 12,000.

The S&P BSE IT index slipped over 1 percent on rise in rupee, the S&P BSE Healthcare index was down 1 percent and the S&P BSE Oil & Gas index closed 0.84 percent lower.

Analysts advise investors to remain cautious ahead of the outcome of the MPC meeting on June 6. The Indian market was shut on June 5 on account of Eid.

The onset of monsoon could be delayed further by a day to June 7, the India Meteorological Department said. Private weather forecaster Skymet also revised its forecast from June 4 to June 7. Monsoon is an important trigger that D-Street watches.

The rupee on June 4 settled unchanged at 69.26 against the US dollar in a lacklustre trade as participants preferred to sit on the fence ahead of the RBI monetary policy outcome.

On the institutional front, FPIs were net sellers in Indian markets for Rs 416 crore while DIIs were also net sellers to the tune of Rs 355 crore, provisional data showed.

Big news:

The outcome of monetary policy will be an important event to watch.

All economists on the CNBC-TV18 panel unanimously voted for a 25 basis points rate cut and four of the five members expect the RBI to keep a 'neutral' stance. The RBI's next monetary policy will be announced on June 6.

Historically, we have always seen that it is a sell-on-news-and-buy-on-rumours as long as the RBI is concerned.

There have been instances wherein six out of 10 times markets have moved lower despite a rate cut by the RBI. This time too there are higher chances of the markets experiencing profit booking since a 25bps cut is already factored in.

However, a deeper cut of 0.5 percent could be a surprise, which could swing the markets in either direction, suggest experts.

Technical view:

Nifty forms a bearish candle on the daily charts that resembled a bearish Harami. The Bearish Harami pattern appears at the top end of an uptrend, which also gives the trader an opportunity to initiate a short trade.

It appears to be the day of consolidation on the bourses as Nifty remained inside the trading range witnessed on June 3.

If the index slips below 12,000 then it can head towards 11,920, breach of which can suggest the failure of the recent breakout.

Three levels: 11932, 12005, 12103

Max Call OI: 12500, 12000

Max Put OI: 11500, 11000

Stocks in news:

Hinduja Group flagship firm Ashok Leyland on June 4 said it has partnered with Suryoday Small Finance Bank for vehicle loans.

Drug firm Aurobindo Pharma June 4 said it has received 10 observations from the US health regulator for its Unit 3 in Hyderabad.

Gurgaon-based Dhanuka Laboratories has been shortlisted as the highest qualified bidder to take over distressed company Orchid Pharma, according to media reports.

Technical recommendations:

We spoke to Religare Broking and here’s what they have to recommend:

Dabur India: Buy| LTP: Rs 405| Target: Rs 430| Stop loss: Rs 394| Upside: 6 percent

CESC: Buy| LTP: Rs 778| Target: Rs 820| Stop loss: Rs 738| Upside: 5.4 percent

ACC: Buy| LTP: Rs 1,658| Target: Rs 1,825| Stop loss: Rs 1,670| Return: 10 percent

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Moneycontrol News
first published: Jun 6, 2019 07:14 am

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