The Reserve Bank of India on December 6 has slashed cash reserve ratio (CRR) by 50 bps, which was on expected lines, leading to infusion of Rs 1.16 lakh crore into the banking system, but the central bank's Monetary Policy Committee (MPC) has decided with a majority vote (4:2) to maintain repo rate at 6.5 percent, for the 11th consecutive meeting (i.e. since February 2023) on December 6 while continuing with the neutral monetary policy stance.
The committee remained focused on achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth. The last print of CPI inflation in October was highest in the last 14 months at 6.21 percent as against 5.49 percent in September led by rise in food prices, while the growth rate in July-September 2024 quarter dropped to a surprising 5.4 percent (the lowest since Q3FY23), compared to 8.1 percent in Q2FY24 and 6.7 percent in Q1FY25.
"Increased inflation, subdued consumption, and evolving macro situation is resulting in a tricky situation for the monetary policy decision. The neutral stance is in line with our expectations," Divam Sharma, Founder and Fund Manager at Green Portfolio said.
He does not expect more than 50 bps cut in repo rate (at which commercial banks borrow money from the central bank by pledging government securities) in 2025, while believing the reduction in CRR is a positive and should impact the banks positively and ensure liquidity in the system.
Barring some of the uncertainties that could evolve in macros, he believes that the financial system is stable, RBI decisions are proactive and responsive and the economy is in a comfortable zone. The markets should continue to benefit over the near term, he said.
Sonam Srivastava, Founder and Fund Manager at Wright Research PMS also believes the RBI's measured approach provides a signal of confidence to markets while highlighting the need for collaborative fiscal and monetary efforts to navigate economic headwinds effectively.
The market seems to have already discounted the RBI move well in advance, as the Nifty 50 surged nearly 1,000 points and Bank Nifty soared more than 2,000 points in the previous five consecutive sessions ahead of RBI policy. Hence, today's consolidation is on expected lines after a smart run up. The Nifty was down 33 points at 24,675, while the Bank Nifty declined 36 points to 53,568, at 11:55 hours IST.
The central bank has revised its CPI inflation forecast for FY25 upwards to 4.8 percent against 4.5 percent earlier as well as Q3FY25 estimates to 5.7 percent (Vs 4.8 percent earlier) and Q4FY25 forecast to 4.5 percent (Vs 4.2 percent earlier), while lowering the full year real GDP growth projection to 6.6 percent from 7.2 percent earlier.
"The upward revision of the inflation forecast for FY25 indicates the RBI’s cautious optimism, acknowledging supply-side challenges while aiming to anchor expectations," Anirudh Garg, Partner and Fund Manager at Invasset PMS said, adding the projected GDP growth for FY25 signals underlying strength in the economy, supported by a recovery in high-frequency indicators and sustained demand across key sectors.
According to him, the CRR reduction is a welcome move especially for sectors such as infrastructure and housing.
Moneycontrol collated a list of top 10 rate sensitive stocks from experts with a 3-4-week perspective. The stock price of December 5 is considered for the calculation of returns:
Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors
Bajaj Finance | CMP: Rs 6,850.4
On the daily chart, Bajaj Finance has recently broken out of the downward sloping trendline and extended its gains. Prices have also reversed on the upside from the important support area of Rs 6,520 to Rs 6,450, with a significant rise in volume, which is a bullish signal. Since November 29, i.e., after the reversal, not a single candle has closed below its prior day's low, which keeps the short-term outlook positive as long as we do not see a close below the previous day's low.
Additionally, the ADX (Average Directional Index) is trading above 25 at 35 levels, supporting the overall momentum in the stock. Hence, the current trend for Bajaj Finance appears to have shifted to the positive side. A break above Rs 6,900 will resume the positive trend with a target of Rs 7,295, which is the 61.8% retracement of the entire fall. On the downside, Rs 6,590 is the nearest support.
Strategy: Buy
Target: Rs 7,295
Stop-Loss: Rs 6,590
Bank of Maharashtra | CMP: Rs 58.33
In the previous trading session, almost all PSU banks sustained higher levels despite the roller coaster movement in the Bank Nifty. Among them, Bank of Maharashtra has consistently extended its gains over the past few sessions. Prices have retraced more than 38.2% of the entire fall that began in June 2024. Now, we can expect it to retrace at least 61.8% of this decline, with the primary target at Rs 67.80. Hence, Bank of Maharashtra remains bullish, and we can expect the uptrend to continue with targets of Rs 67.80. On the downside, Rs 55.50 is the crucial support.
Strategy: Buy
Target: Rs 67.80
Stop-Loss: Rs 55.50
Sudeep Shah, Head of Technical and Derivative Research at SBI Securities
ICICI Bank | CMP: Rs 1,336.5
ICICI Bank has given a horizontal trendline breakout on the daily scale. This breakout is confirmed by robust volume. Additionally, a sizable bullish candle formed on the breakout day further reinforces the strength of this move. The stock is currently trading above both its short and long-term moving averages, which are in an upward trajectory and aligned in the desired sequence, indicating a strong trend. Moreover, the daily RSI (Relative Strength Index) is in bullish territory and trending upward, which is another positive signal. Hence, we recommend accumulating the stock in the zone of Rs 1,338-1,328 with a stop-loss of Rs 1,280. On the upside, it is likely to test the level of Rs 1,410, followed by Rs 1,440 in the short term.
Strategy: Buy
Target: Rs 1,410, Rs 1,440
Stop-Loss: Rs 1,280
Macrotech Developers | CMP: Rs 1,369.7
Lodha marked the low of Rs 1,043 in October and thereafter started moving higher along with higher volume. Along with this rise, the stock surged above both its short and long-term moving averages. These averages have started edging higher, which is a bullish sign. Recently, the stock gave a falling channel breakout on the daily scale. Further, the daily RSI is quoted at 67.71 and is in a rising mode. Additionally, the MACD (Moving Average Convergence Divergence) histogram is suggesting a pickup in upside momentum. Hence, we recommend accumulating the stock in the zone of Rs 1,370-1,360 with a stop-loss of Rs 1,310. On the upside, it is likely to test the level of Rs 1,450, followed by Rs 1,480 in the short term.
Strategy: Buy
Target: Rs 1,450, Rs 1,480
Stop-Loss: Rs 1,310
Anshul Jain, Head of Research at Lakshmishree Investments
HDFC Bank | CMP: Rs 1,865.75
HDFC Bank presents a strategic opportunity for long-term investors. The bank has formed a compelling base-on-base Cup-and-Handle pattern on its daily chart, reflecting significant institutional accumulation. The first base lasted 325 days, followed by a 100-day base post-breakout, indicating solid support. The breakout level at Rs 1,810 now serves as a critical zone. Investors should watch for dips to the Rs 1,810-1,825 range as an ideal entry point. With a near-term target of Rs 1,950, this setup also projects an extended target of Rs 2,200 within 6 to 9 months. The technical pattern emphasizes sustained buying interest, making this a strong candidate for portfolio growth.
Strategy: Buy
Target: Rs 1,950, Rs 2,200
Stop-Loss: Rs 1,800
Vidnyan Sawant, HOD - Research at GEPL Capital
State Bank of India | CMP: Rs 865.45
SBI is in a strong uptrend, consistently respecting its 50-week EMA (Exponential Moving Average) throughout its upward journey. In the past week, the stock demonstrated a bullish mean reversion from its key average. Momentum indicators confirm this strength, with a bullish crossover signaling continued upward momentum. Looking ahead, the stock shows potential for an upside target of Rs 950. To manage risk effectively, a stop-loss at Rs 812 on a closing basis is recommended.
Strategy: Buy
Target: Rs 950
Stop-Loss: Rs 812
Federal Bank | CMP: Rs 214.97
Since 2020, Federal Bank has exhibited a robust chart structure, consistently forming higher tops and higher bottoms, indicating a strong positive trend. Despite market volatility, the stock has demonstrated high relative strength. The MACD momentum indicator remains in buy mode within positive territory, further reinforcing the bullish momentum. Looking ahead, the stock has an upside potential with a target of Rs 240, while a stop-loss at Rs 200 on a closing basis is recommended to manage risk.
Strategy: Buy
Target: Rs 240
Stop-Loss: Rs 200
Amol Athawale, VP-Technical Research, Kotak Securities
Axis Bank | CMP: Rs 1,166.4
Post the decline from higher levels, Axis Bank rebounded from its support zone and witnessed a steady recovery from the lower levels. Additionally, on the weekly charts, the stock has given a breakout from its sloping channel formation. The up moves in the counter suggest a new leg of the bullish trend from the current levels.
Strategy: Buy
Target: Rs 1,250
Stop-Loss: Rs 1,130
Oberoi Realty | CMP: Rs 2,130.2
On the weekly charts, Oberoi Realty is in a rising channel chart formation with a higher high and higher low series pattern. Additionally, technical indicators like ADX and RSI are indicating a further uptrend from current levels, which could boost the bullish momentum in the near future.
Strategy: Buy
Target: Rs 2,290
Stop-Loss: Rs 2,060
Escorts Kubota | CMP: Rs 3438
On a daily time frame, Escorts Kubota had been in a downtrend. As a result, it is currently in oversold territory and is near its demand area. The texture of the chart formation and technical indicator RSI indicate that the stock is very likely to rebound for a new leg of the up move from its demand zone.
Strategy: Buy
Target: Rs 3,700
Stop-Loss: Rs 3,330
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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