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MOSL: Morning India (6/December/19): 1. EcoScope (RBI surprises with status quo); 2. Reliance Industries; 3. Allcargo Logistics; 4. MRPL

MOrning India (6/December/19): 1. EcoScope (RBI surprises with status quo); 2. Reliance Industries; 3. Allcargo Logistics; 4. MRPL

 

Today’s top research idea

EcoScope: RBI surprises with status quo; Rate cut in next MPC meeting unlikely

• As against widespread expectations of a rate cut, the Reserve Bank of India (RBI) maintained the policy repo rate at 5.15% in its monetary policy meeting on 5th Dec'19.
• Not surprisingly, the RBI revised up its inflation forecast but reduced its growth forecast sharply for 2HFY20. From 3.5-3.7% earlier, the inflation projection is now revised to 4.7-5.1% for 2HFY20.
• Real GDP growth forecast for 2HFY20 is cut from 6.6-7.2% earlier to 4.9-5.5% now. Consequently, real GDP growth forecast for FY20 has also been reduced sharply from 6.1% earlier to 5% (down by 240bp since the Feb'19 monetary policy meet). Moreover, the inflation projection for 1QFY21 is revised upward, while the growth forecast is revised down by almost 100bp
• An unexpected status quo confirms that the RBI prioritized rising inflation over grim economic growth.

Piping hot news

OPEC and allies prepare to deepen oil output cuts

OPEC and its allies led by Russia on Thursday were moving closer to agreeing one of the deepest output cuts this decade to support crude prices and prevent a glut, sources from OPEC and its allied producers said. The Organization of the Petroleum Exporting Countries (OPEC) meets on Thursday in Vienna and with Russia and others, a grouping known as OPEC+, on Friday.