The Monetary Policy Committee (MPC) on February 8 maintained the repo rate unchanged for the sixth consecutive time at 6.5 percent, with continued focus on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.
Five out of six committee members voted in favour of this decision, while professor Jayanth R Varma voted for a change in stance to neutral and to reduce the policy repo rate by 25 basis points.
The decision of the Reserve Bank's rate-setting panel came on the expected lines, given the possible risk to the inflation because of geopolitical events and repetitive food price escalations in the domestic market. The central bank remains committed to bringing inflation down to 4 percent target, while maintaining the economic growth and liquidity in balance.
After the MPC outcome, the benchmark indices saw a rush to book profits, that drove the BSE Sensex down 493 points to 71,659, and the Nifty 50 down 137 points to 21,793, forming a bearish candlestick pattern on the daily charts. The Nifty, however, held on to the 10-day EMA of around 21,750 as a support.
The Bank Nifty was also down 348 points to 45,470 at 12:13pm, and formed a long bearish candlestick pattern on the daily timeframe.
"The RBI policy is more of a non-event as nothing new was mentioned in it. The governor kept on emphasising that the RBI will watch out for inflation to cool off below 4 percent for them to be comfortable with rate cuts," Apurva Sheth, head of market perspectives and research at SAMCO Securities, said.
He believes that since the economic growth is stable and the US Fed too is in no mood to cut rates soon, one can expect the RBI to maintain its hawkish stance in H1CY2024.
The RBI sees inflation at 4.5 percent and real GDP growth at 7 percent for FY25, against 5.4 percent and 7.3 percent (as per the first advance estimates (FAE) released by the National Statistical Office) for FY24. The central bank expects 5 percent CPI inflation for 1H2024 (against 5.2 percent earlier) and 4 percent for Q2FY25, while the economic growth forecast has been revised upwards for three quarters of FY25.
"Overall, there were no major announcements, hinting at an imminent easing. The RBI has been managing the daily liquidity with overnight infusion, as and when required. We don't see easy monetary policy anytime soon, especially with such strong growth," Nikhil Gupta, chief economist at MOFSL Group, said.
Moneycontrol collated a list of top 10 stocks from experts with a 3-4-week perspective. The stock price of February 7 is considered for the calculation of returns:
Expert: Nagaraj Shetti, senior technical research analyst at HDFC Securities
State Bank of India: Buy | LTP: Rs 675.25 | Stop-Loss: Rs 635 | Target: Rs 730 | Return: 8 percent
After showing downward correction in January 2024, the PSU banking major has witnessed a sharp upside breakout in the last couple of weeks and is currently trading higher. The stock price has moved above the crucial hurdle at Rs 655 and is trading higher.
The long-term chart remains positive with higher tops and bottoms observed on the weekly timeframe chart. The volume started rising during the upside breakout in the stock price, while the weekly 14-period RSI (relative strength index) showed positive indication.
Buying can be initiated in SBI at CMP (Rs 675.25), add more on dips down to Rs 655, wait for the upside target of Rs 730 in the next 3-5 weeks. Place a stop-loss of Rs 635.
Samvardhana Motherson International: Buy | LTP: Rs 122.30 | Stop-Loss: Rs 114 | Target: Rs 134 | Return: 10 percent
The stock price has been on the way up over the last few months, as we observe higher highs and higher lows formation over the last few weeks. Recently, the stock price has witnessed upside breakout of down sloping intermediate trend line at Rs 110 levels and closed higher.
Though, the stock price placed at the highs, still there is no indication of any reversal pattern building at the higher level. Weekly 14 period RSI is around 70 and this indicates strong upside momentum for the stock price.
One may look to buy Motherson at CMP (Rs 122.30), add more on dips down to Rs 118 and wait for the upside target of Rs 134 in the next 3-5 weeks. Place a stop-loss of Rs 114.
Expert: Vidnyan Sawant, HOD - Research at GEPL Capital
Central Bank of India: Buy | LTP: Rs 74.15 | Stop-Loss: Rs 68 | Target: Rs 89 | Return: 20 percent
Central Bank of India is displaying an ascending structure, characterized by higher highs and higher lows, and is currently trading at its 52-week high, indicating robust momentum.
The stock's upward trajectory is further supported by its breakout from multi-year highs, accompanied by significant volume buildup, signifying positive developments driving the stock's upward movement.
The RSI remains consistently above 60 on both daily and weekly scales. Notably, the RSI is ascending alongside its key averages of the 12-week and 26-week exponential moving averages (EMAs), underscoring the strong positive momentum of the stock.
Looking ahead, it's reasonable to anticipate continued upward movement in the stock, with a potential target price of 89. It's advisable to set a stop-loss at Rs 68 on a closing basis to manage risk effectively.
Can Fin Homes: Buy | LTP: Rs 850.95 | Stop-Loss: Rs 812 | Target: Rs 940 | Return: 10.5 percent
Can Fin Homes is demonstrating a pattern of higher highs and higher lows on the daily scale, trading near its all-time highs with a robust momentum of nearly 5 percent range.
The stock has shown bullish sentiment, finding support consistently at the polarity range, where the prior resistance from October 2021 has now turned into support. This week's breakout above the December 2023 swing high signifies an upward trajectory.
Consistently rebounding from support levels defined by the 12-week and 26-week exponential moving averages (EMA) indicates strong support for the stock, reinforcing the bullish sentiment. Additionally, the RSI has consistently remained above the 60 mark across various time frames, including daily, weekly, and monthly, indicating sustained positive momentum in the stock.
Looking ahead, it is reasonable to anticipate that the upward movement will continue, potentially reaching Rs 940 level. It is advisable to set a stop-loss at Rs 812 on a closing basis to manage risk.
Expert: Jigar S Patel, senior manager - equity research at Anand Rathi
Yes Bank: Buy | LTP: Rs 29.80 | Stop-Loss: Rs 25 | Target: Rs 35 | Return: 17 percent
The counter has recently given a clean breakout on the monthly time frame chart along with stochastics reversing from the 70 zone on a weekly scale, which is looking lucrative at current levels.
Also, Yes Bank has taken out its 1-year-old high of Rs 24.75, thus adding further bullish stance to the counter. Thus, investors and traders can enter longs in the zone of Rs 28–30 with an upside target of Rs 35 and a stop-loss of Rs 25 on a daily closing basis.
Bajaj Finance: Buy | LTP: Rs 6,709.2 | Stop-Loss: Rs 6,450 | Target: Rs 7,200 | Return: 7 percent
After registering the top near Rs 7,800 mark on January 8, 2024, since then the counter has tanked almost Rs 1,300, which is around 16 percent. At the current juncture, it has a bullish AB=CD pattern near the Rs 6,500–6,600 zone.
Also, a one-sided massive sell-off has brought the counter into an extremely oversold zone of stochastics. Since Baj-finance has taken support near Rs 6,500, it is showing signs of massive bounceback from the mentioned support.
Thus, one can buy in the zone of Rs 6,600–6,800 for an upside target of Rs 7,200, and the stop-loss would be around Rs 6,450 on a daily close basis.
Bank of Baroda: Buy | LTP: Rs 244.65 | Stop-Loss: Rs 225 | Target: Rs 275 | Return: 12 percent
Since the last four sessions, the said counter has been in corrective mode after posting a decent rally until Rs 260 mark and is currently placed near Rs 240 mark. The said counter is well placed above the William Alligator trend-following indicator and also above the previous top of approximately Rs 240.
On the indicator front, stochastics is well placed above 80 levels on the weekly scale, which is looking attractive. Thus, one can buy in the range of Rs 240–245 with an upside target of Rs 275, and the stop-loss will be placed near Rs 225 on a daily close basis.
Expert: Kushal Gandhi, technical analyst at Stoxbox
Five-Star Business Finance: Buy | LTP: Rs 771.65 | Stop-Loss: Rs 720 | Target: Rs 876 | Return: 13.5 percent
The young generation stock has entered a broader consolidation phase following a sharp 76 percent rise. The price action showing resilience to drawdowns below its previous breakout zone indicates strength in the support bolstered by the crucial pivot coupled with a fair value area.
This has further allowed the price action to garner bullish strength on improving EPS strength and buyer’s demand. We recommend a buy on Five-Star for the target of Rs 876 with a protective stop-loss at Rs 720.
Colgate Palmolive: Buy | LTP: Rs 2,551.15 | Stop-Loss: Rs 2,430 | Target: Rs 2,970 | Return: 16 percent
Colgate Palmolive has run up 77 percent from the February 2023 lows on a stronger momentum and improving EPS strength and buyers’ demand. The price action is anticipated to have taken a breather to potentially garner bullish strength as the price action tightens ahead of the resistance zone from Rs 2,552-2,577.
With the shorter-term moving average offering immediate support, the price action offers a lower risk and a higher rewarding opportunity for the target of Rs 2,970 and stop-loss at Rs 2,430.
M&M Financial Services: Buy | LTP: Rs 296.8 | Stop-Loss: Rs 277 | Target: Rs 339 | Return: 14 percent
Following a steep 31.5 percent decline, the stock briefly entered stage 1 whilst trading in a rounding bottom pattern. This is a potential sign of accumulation. The trading session on 7th February saw a bullish breakout on improving relative strength compared to the 50 index. We reiterate a buy on M&M Financial for the target of Rs 339 with a protective stop-loss of Rs 277.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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