On the second term of Modi 2.0 government, RBI on its six-member monetary policy committee led by Governor Shaktikanta Das has reduced the rate by 25 basis points to 5.75% for the first time after 2010 and change in policy stance to ‘accommodative’ from ‘neutral’ after the gross domestic product grew at a tepid rate of 5.8% during the fourth quarter of 2018-19.
All the MPC members unanimously decided to reduce the policy repo rate by 25 basis. The rate cut is basically done to boost the growth of the economy, to increase exports and investment activity which has been hampered by the global trade war tensions between both China and Mexico. Going forward, to improve private consumption, ease of business in rural areas, and to generate jobs.
Currently, the rupee strengthened to 69.28 per dollar from the previous close of 69.36 earlier.
Globally, on Tuesday Australia had also cut interest rates for the first time in three years at 1.25% from 1.50%. Meanwhile, US Federal Reserve Chairman Jerome Powell also signaled the possibility of a rate cut by 25bps.
On the daily charts, Nifty is rising along the bullish trend line. It is facing resistance near 11,980-12,000 levels. Further, if it falls below 11900 more downsides can emerge in the index. The momentum Oscillator suggests some cautiousness for the bull’s traders should wait for the confirmation upside in the index, if it holds above 11970 then the long positions can be expected.