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RBI monetary policy to dictate market trend

06-Feb-20    08:01

The Reserve Bank of India (RBI) will take its interest rates decision today, 6 February 2020 amid concerns over fiscal deficit and inflation. The six-member Monetary Policy Committee (MPC) kicked off three-day monetary policy meet on Tuesday, 4 February 2020, for its sixth bi-monthly Monetary Policy Statement for 2019-20. The resolution of the MPC will be unveiled at 11.45 AM today, 6 February 2020.

Earlier, the Reserve Bank of India (RBI) in December had kept interest rates unchanged after five consecutive cuts.

Bi-monthly monetary policy's outlook on inflation and economy will be more vital, as the markets are already factoring in that central bank will most likely maintain status quo on interest rates.

Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could rise 14 points at the opening bell.

Overseas, Asian stocks were trading higher on Thursday after US S&P 500 hit a record peak following encouraging economic data, while investors keep a wary eye on the impact of the coronavirus outbreak.

In US, stocks closed sharply higher on Wednesday for the third consecutive session as Wall Street continued its rebound from a selloff sparked in part by the outbreak of an Asian virus that has killed hundreds and infected tens of thousands.

Bullish sentiment was seen driven by hopes that stepped up containment efforts and work toward new vaccines could blunt the economic impact of the coronavirus.

On economic front, the services sector of the US economy, which accounts for most activity, grew at the fastest pace in six months in January, according to ISM's purchasing manager survey.

Earlier, a government report showed that the US trade deficit fell in 2019 for the first time in six years, reflecting tariff-reduced imports from China, with a 1.7% decline to $616.8 billion in December.

Back home, key indices advanced for third straight trading sessions on Wednesday. The barometer BSE S&P Sensex rose 353.28 points or 0.87% to 41,142.66. The Nifty 50 index added 110.60 points or 0.94% to 12,090.25. The sentiment got a boost after India's Services PMI in January rose at quickest rates in seven years. Positive global shares also supported buying. Investors, however, remained cautious ahead of the Reserve Bank of India (RBI)'s policy outcome.

The trading activity on that day showed that the foreign portfolio investors (FPIs) bought shares worth a net Rs 248.94 crore yesterday, 5 February 2020, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 262.75 crore, yesterday, 5 February 2020, as per provisional data.

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