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The Reserve Bank of India (RBI) maintained the repo rate at 6.5% during its December 6 policy review, amid ongoing inflationary pressures, while revising the GDP forecast for FY 2025 down to 6.6% from 7.2%. To enhance liquidity, the RBI announced a 50 basis point cut in the Cash Reserve Ratio (CRR), effective December 14 and 28, which is expected to inject approximately Rs 1.06 lakh crore into the economy, supporting growth and project funding. Market experts view this as a proactive measure that could signal the beginning of a declining interest rate cycle.
Broking firms Groww and Samco Securities have launched innovative features to encourage responsible derivatives trading among retail investors, complemented by educational initiatives to boost financial literacy. In response, markets regulator Sebi has tightened equity derivatives trading norms, limiting weekly options contracts to one per exchange and increasing the minimum trading amount to Rs 15-20 lakh. Additional measures include enhanced monitoring of position limits, upfront collection of option premiums, and increased tail risk coverage.
Axis Securities has identified an oversold market as a long-term investment opportunity, despite a 1.5% cut in Nifty 50 earnings projections for FY25. With over 60% of NSE 500 stocks down more than 20% from their highs, the firm recommends focusing on growth at a reasonable price and quality investments.The recent political stability in Maharashtra, following the BJP-led Mahayuti alliance's significant electoral victory, is expected to boost market sentiment. This comes amid a challenging period for the Indian equity market, marked by foreign institutional investor selling and disappointing earnings.
Nifty is expected to open with a gap up of 300-400 points on November 25, following the BJP-led NDA's strong performance in the Maharashtra elections, which is anticipated to boost market confidence and focus on infrastructure development. Experts note that this positive surprise could elicit a strong market reaction, despite recent corrections. The benchmark indices gained over 2.5 percent on Friday, although they remain marginally down for the month.
Nifty 50 rebounded strongly, surpassing the 23,800 mark, with a target of 24,000 and crucial resistance at 24,300-24,400. Bank Nifty also showed momentum, aiming for 51,600, with support at 50,500. On November 22, Nifty gained 557 points, while Bank Nifty rose by 763 points, reflecting positive market breadth.
Investors covered short positions in NSE Nifty and Bank Nifty ahead of the Maharashtra and Jharkhand election results, leading to significant unwinding in the November derivatives series. Nifty surged to reclaim 23,900, with key resistance at 24,000 and support at 23,500, as FIIs increased net long positions, reflecting a cautiously optimistic market sentiment.
Bulls regained control in the equity markets as the Sensex surged by 1,000 points and the Nifty climbed above 23,750 on November 19, driven by value-buying and strong performance in blue-chip stocks. Key factors included the markets being in oversold territory, with the Nifty"s relative strength index falling below 30, and a notable shift where Domestic Institutional Investors (DIIs) outpaced Foreign Institutional Investors (FIIs) in buying, indicating robust domestic support amidst foreign outflows.
Goldman Sachs has downgraded Indian equities to 'neutral' from 'overweight', lowering the Nifty 12-month target to 27,000, citing a potential 'time correction' in the next three to six months. Despite strong domestic flows, high valuations and slowing economic growth are expected to limit upside potential. Analysts predict Q2 earnings growth for Nifty companies will drop to around 2%, marking the slowest growth in 17 quarters, following a period of robust double-digit increases.

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