RBI delivers on growth, time to shift focus to structural reforms: Nilesh Shah
"It is not a bit of a surprise. It is a big surprise. After nudges in the initial power play, RBI has changed gears by front loading pro-growth measures. Both the bond market and the equity market has been positively surprised. The yields had gone down from 6.20 to 6.12 based on 50 basis point rate cut. It bounced back to 6.20 when they realised that stance has changed to neutral and again, it started coming down when the CRR cut announcement came," says Nilesh Shah, MD, Kotak AMC.
ADVERTISEMENT In cricket parlance, he has hit two shots which is more than the run rate which was required, you talk about CRR, you talk about repo rate cut, but he has also sent a googly in terms of change of stance. How should market interpret it?
Nilesh Shah: Well, after hitting two sixes, when the run rate is well under control, it is prudent to play the next ball cautiously rather than going for a third six, that is exactly what Mr Gandhi explained. RBI has frontloaded repo rate cut and liquidity measure to support growth. Now, it is time to be focusing on other parts of the economy, other parts of the banking rather than continue to give hope to the market that more rate cuts are coming.
I wanted to have your take on the markets as well because this particular move by the RBI, the markets are rejoicing the fact because Nifty Bank, look at the move, it is more than the 600 points of jump, getting into that all-time high zone; along with that Nifty 50, it is a double century once again, near to that 25,000 mark. Yes, it has been a bit of a surprise. But which sector can actually surprise on the upside because this news flow is indeed positive for banks, NBFC, real estate, and the list is long.
Nilesh Shah: So, it is not a bit of a surprise. It is a big surprise. After nudges in the initial power play, RBI has changed gears by front loading pro-growth measures. Both the bond market and the equity market has been positively surprised. The yields had gone down from 6.20 to 6.12 based on 50 basis point rate cut. It bounced back to 6.20 when they realised that stance has changed to neutral and again, it started coming down when the CRR cut announcement came.
Same thing happened in the banking sector and broad market. It came down when they heard repo rate was cut by 50 basis point as it would have impacted banks NIM margin, bounced back once they realised there is CRR cut happening. Overall, both debt and equity market will be positively surprised by this front-loading of growth measures. And now, actually, I have a worry, I hope President Trump does not borrow RBI governor to manage US Fed.
Help us understand the impact that you see of this surge in liquidity that will now eventually take place, the impact of that on the bond market. Do you believe the bond yield curve would flatten out because we did see a little bit of a spike coming in around 10:15 or so when the announcement was made about the surge in liquidity, where do you see the bond market headed from here?
Nilesh Shah: So, the bond market's immediate reaction will be to do a parallel shift down. The short, medium, long all will come down to reflect 50 basis point rate cut adjustment. Then, the short end may come further down because of the liquidity measures from having probably adequate liquidity or maybe if I can begin there was a time when there was excessive liquidity of more than 10 lakh crore in banking system, then it became adequate liquidity, then it became deficient liquidity, then it again became adequate liquidity, and now, we are probably at the stage between RBI OMO, the dollar swap, and the RBI dividend and CRR cut about 12 lakh crore of liquidity has been imparted into the system. Clearly, when liquidity improves, the short end comes further down. The spread between 10 and 30 year is 60 basis point yesterday evening. I am sure that is likely to narrow further. So, we will see first parallel move down on yield curve, then short yield curve coming further down, and eventually long yield also, long end of the curve also coming down little bit.
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Mint
an hour ago
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Stocks to trade today: Trade Brains Portal recommends two stocks for 9 June
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The move sparked optimism around credit demand and economic recovery, triggering broad-based buying across consumption-driven and growth-oriented sectors. Infrastructure & Realty, NBFCs & Finance, and Metal stocks were among the top gainers. The Nifty 50 rose 252.15 points, or 1.02%, opening above its 20-day EMA at 24,748.70, hitting an intraday high of 25,029.50, and settling at 25,003.05. The BSE Sensex mirrored this strength, opening at 81,434.24 and closing at 82,188.99, up 746.95 points or 0.92%. Both indices stayed comfortably above their 20/50/100/200 EMAs on the daily chart, with RSI levels at 59.98 for the Nifty and 59.27 for the Sensex—well below the overbought threshold of 70. Banking stocks rallied, with the Nifty Bank index hitting a record high of 56,695 before closing at 56,578.40, up 1.47%. The Nifty Private Bank index jumped 1.79% to 27,832.50, buoyed by expectations of improved liquidity and credit flow, particularly to MSMEs and retail borrowers. 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Can it keep buzzing? Asian markets ended mixed. The Shanghai Composite inched up 0.04%, and the Nikkei 225 gained 0.5%, while the Hang Seng fell 0.48% to 23,792.54 and the Shenzhen Component declined by 0.19%. In the US, Dow Jones Futures were up 0.34%, or 142 points, suggesting a positive open. Trade Brains Portal is a stock analysis platform. Its trade name is Dailyraven Technologies Pvt. Ltd, and its Sebi-registered research analyst registration number is INH000015729. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
an hour ago
- Mint
Best stocks to buy today, as recommended by NeoTrader's Raja Venkatraman
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Rate-sensitive sectors like realty, financials, and auto were the biggest beneficiaries, with other sectors also performing well. Broader market indices also extended their gains, rising between 0.8% and 1.2%. While the Nifty 50 is still in a consolidation phase, the renewed vigor in rate-sensitive sectors, especially the breakout in the banking index, has reignited hopes for a sustained upward trend. A definitive break above 25,200 on the Nifty could initiate the next leg of the rally, potentially propelling the index towards 25,600. Looking ahead, the impact of the recent rate cut is expected to continue driving market sentiment. The rate-sensitive segments, along with specific themes like railways, are likely to remain in the spotlight, with other sectors contributing in a rotational manner. Finally, after some huffing and puffing, the Nifty 50 managed to crack through the resistance at 25,000 and powered its way higher by Friday. In between, there were some intraday fulminations but the bulls managed to hold the wheel and did not allow the trend to go off the road. Matters were helped in the last week when the best efforts by the bears were held at abeyance over three successive sessions, with Doji type candle formations. When such a pattern gave way to a bullish candle starting on Monday, the stage was set for more gains. Results flow has been good for the fourth quarter, and some heavyweights came out with Street-beating numbers, which has kept the sentiment juices flowing rather nicely. In addition, activity in the mid- and small-cap segments has also been good. With the threat of the Trump tariffs now receding with no real clarity, the market has one less item to worry about. The Reserve Bank of India's policy was the turning point last week. On Friday, the RBI Governor went beyond anticipation to give a 50 basis point repo rate cut and 100 bps CRR cut to bolster the banking and financials sectors. (TradingView) Bank Nifty compared to Nifty has fared well and would give us more than fair evidence of continued bullish play to emerge next week, however on dips. Considering the pointers, one should look to buy at lower levels in the indices. The sharp rise in trends on Friday beyond the much-touted resistances at 25,000 has given us some opportunity to look for some opportunities in Nifty now. Trading has been quite challenging as the movements are happening in spurts hence it's best to trade with suitable stop loss. Applying a fair amount of discretion shall enable us to profit from the volatility that shall continue, as we are now witnessing some positive vibes against the backdrop of a pensive global scenario. POLYCAB: Buy CMP and dips to ₹ 6,000 | Stop: ₹ 5,950 | Target: ₹ 6,525-6,700 Why POLYCAB is recommended: With about 25% organized market share, Polycab leads the domestic C&W market. The company is present in both cables (65% of the sales mix) and wires (25-30% of the mix).However, Jefferies feels that the stock will not face major headwinds as it already has an established presence and the new competition will take time to impact the revenues. This has led to a double bottom formation and a gradual ascent to the top . With prices holding firm at the TS line we can consider going long. With about 25% organized market share, Polycab leads the domestic C&W market. The company is present in both cables (65% of the sales mix) and wires (25-30% of the mix).However, Jefferies feels that the stock will not face major headwinds as it already has an established presence and the new competition will take time to impact the revenues. This has led to a double bottom formation and a gradual ascent to the top . With prices holding firm at the TS line we can consider going long. Key metrics P/E: 45.90 52-week high: ₹ 7,607.15 Volume: 319.43K Technical analysis: Support at ₹ 4,950; resistance at ₹ 6,950 Support at 4,950; resistance at 6,950 Risk factors: Market volatility and sector-wide fluctuations in geopolitical news could impact returns Market volatility and sector-wide fluctuations in geopolitical news could impact returns Buy at: CMP and dips to ₹ 6,000 CMP and dips to 6,000 Target price: ₹ 6,525-6,700 in 1 month 6,525-6,700 in 1 month Stop-loss: ₹ 5,950 BORORENEW: Buy CMP and dips to ₹ 542 | Stop: ₹ 525 | Target: ₹ 615-630 Why BORORENEW is recommended: BORORENEW posted weak Q4 numbers, indicating that the trends are under pressure. However, with the nature of the prices seen in the last few days we can comprehend that the newsflow has already been priced in. The volatile moves seen in the last 3 months are now seen giving up, indicating a possibility of some upward bounce as a V-U pattern is seen forming with volumes. Can look to go long. BORORENEW posted weak Q4 numbers, indicating that the trends are under pressure. However, with the nature of the prices seen in the last few days we can comprehend that the newsflow has already been priced in. The volatile moves seen in the last 3 months are now seen giving up, indicating a possibility of some upward bounce as a V-U pattern is seen forming with volumes. Can look to go long. Key metrics P/E: 225.05 52-week high: ₹ 644 Volume: 540.20K Technical analysis: Support at ₹ 460; resistance at ₹ 680 Support at 460; resistance at 680 Risk factors: Competition from streaming platforms and changing consumer preferences Competition from streaming platforms and changing consumer preferences Buy at: CMP and dips to ₹ 542 CMP and dips to 542 Target price: ₹ 615-630 in 1 month 615-630 in 1 month Stop-loss: ₹ 525 DALBHARAT: Buy above ₹ 2,120 and dips to ₹ 2,090 | Stop: ₹ 2,070 | Target: ₹ 2,250-2,325 Why DALBHARAT is recommended: The counter has been consolidating around the TS & KS Bands for the past few days. After a brief decline the stocks managed to gather support within the bands and produce a turnaround. After the recent test of the TS & KS bands and a strong closing on Friday we can look at some positive vibes to emerge. The counter has been consolidating around the TS & KS Bands for the past few days. After a brief decline the stocks managed to gather support within the bands and produce a turnaround. After the recent test of the TS & KS bands and a strong closing on Friday we can look at some positive vibes to emerge. Key metrics P/E: 208.50 52-week high: ₹ 2,166.70 Volume: 105.72K Technical analysis: Support at ₹ 2,050; resistance at ₹ 2,250 Support at 2,050; resistance at 2,250 Risk factors: Supplier retention and potential customer acquisition challenges Supplier retention and potential customer acquisition challenges Buy at: Above ₹ 2,120 and dips to ₹ 2,090 Above 2,120 and dips to 2,090 Target price: ₹ 2,250-2,325 in 1 month 2,250-2,325 in 1 month Stop-loss: ₹ 2,070 Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
