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Gujarat elections opinion poll pulls Sensex lower; Nifty holds 10,100 ahead of RBI decision

Equity benchmarks trimmed losses in last couple of hours of trade to end mildly lower on Tuesday as investors maintained their cautious stance ahead of RBI policy decision tomorrow.

Lower FY18 economic growth forecast by Fitch Ratings and ABP News CSDS opinion poll indicating tough fight for the BJP in Gujarat also dampened market sentiment.

FMCG, metals, auto and infra stocks pulled the market lower, but Reliance Industries and banking & financials (barring HDFC Bank) capped losses.

The 30-share BSE Sensex was down 67.28 points at 32,802.44 while the 50-share NSE Nifty managed to hold 10,100 level, ending down 9.50 points at 10,118.30.

The market breadth was negative as about three shares declined for every two shares rising on the BSE.

Experts feel the market is expected to remain rangebound as all eyes would be on the much awaited RBI policy decision. The Street largely expects the central bank to maintain status quo on rates, they suggest.

“We expect RBI to sit tight on the monetary policy, with no rate move expected for at least the next two quarters. In fact, there’s a possibility of the central bank adopting a relatively hawkish tone given the sharp liquidity dip in banking, growing inflation and concerns of fiscal slippage,” Amar Ambani, Partner & Head of Research, IIFL said.

Thus, Jayant Manglik President Retail Sales at Religare Securities expects volatility to remain high during the trading session and advise traders to hedge their trading positions.

Meanwhile, Fitch Ratings cut the country’s GDP growth forecast for the current fiscal to 6.7 percent from the earlier projected 6.9 percent, saying the rebound was weaker than expected.

One big factor which has fueled concerns is the opinion poll by the ABP News- Centre for the Study of Developing Societies (CSDS) that shows a tough fight for Bharatiya Janata Party (BJP) in Gujarat. The state is slated to go to polls in two phases — on December 9 and 14. Results will be declared on December 18.

Nifty PSU Bank index outperformed equity benchmarks as well as sectoral indices, rising 1.4 percent ahead of monetary policy committee decision.

State Bank of India, Bajaj Finance, Yes Bank, IndusInd Bank and Indiabulls Housing Finance advanced 1-2 percent, followed by ICICI Bank and Kotak Mahindra Bank. However, HDFC Bank (down 0.74 percent) and Axis Bank (0.3 percent) were undre pressure.

Reliance Industries and Bharti Airtel among others closed 1.3 percent higher whereas Eicher Motors, Hero MotoCorp, ONGC, Wipro, Tata Steel, NTPC, Power Grid and Bajaj Auto fell 1-2 percent.

Bharat Forge shares gained 3.4 percent after the strong trend continued in North American class 8 truck orders in November. PNB rose 1.7 percent after the bank raised Rs 1,315 crore through stake sale in PNB Housing Finance.

Parag Milk Foods (up 1.7 percent) and Heritage Foods (0.75 percent) saw buying interest after Edelweiss initiated its coverage with buy rating on both stocks, citing strong growth ahead.

Shriram Transport, L&T Finance Holdings, MAS Financial, Can Fin Homes, Equitas Holdings, Dwarikesh Sugar, Praj Industries, Triveni Engineering, United Spirits, Radico Khaitan, United Breweries, Hathway Cable, Den Networks, Quick Heal and Jet Airways rallied 1-14 percent. Minda Industries and IL&FS Investment Managers fell 6-7 percent.

On the global front, Asian markets ended mostly lower as Australia’s central bank met expectations by keeping its cash rate unchanged. European stocks were mixed amid Brexit uncertainty.

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