Closing Bell: Nifty ends around 17,600, Sensex up 144 pts; realty, auto outperform

Taking Stock: Sensex gains 144 pts, Nifty around 17,600 as RBI keeps policy rate unchanged

Among sectors, realty index added 3 percent, auto index gained 1 percent, while pharma, capital goods, oil & gas, power up 0.5 percent each. However, FMCG, IT and metal down 0.5% each.... Read More

Domestic indices welcomed RBI’s decision to keep interest rate unchanged. Nifty gained strength after policy outcome and remained in positive territory throughout the session to close with gains of 42 points at 17599 levels. Except FMCG, IT and Consumer Durables, all sectors ended in green. Volatility index, India VIX fell further to 11.8, giving some comfort to traders.

Additionally, FIIs have been continuous buyers for last five days to the tune of Rs 4263 crore and their F&O short positions have reduced from 92% to 83%, providing strength to the market.

After six consecutive hikes, RBI kept rate unchanged at 6.5%. The decision came in as surprise after majority of the central banks around the world continued to increase rates in an effort to tame stubbornly high inflation. Rate pause and encouraging domestic economic data continues to provide positive undertone to the market. However, given the backdrop of global uncertainties and fear of US recession, we might see range bound movement in the near term.

The Indian rupee traded volatile after RBI surprised the market by pausing the rate with a warning. The local unit initially decline but strengthen following recovery in the domestic equities backed by foreign fund inflows.

With today’s pause, the carry trade is back in the rupee. The spread between India’s bond yield premium over the US makes the rupee more attractive as a carry target.

In the near term, spot USDINR is expected to trade between 81.70 to 82.50 with a bearish bias.

Markets maintained their upward journey led by a sharp rally in realty stocks after RBI paused on its rate hike decision that prompted traders to lap up realty stocks on hopes stable interest rates going ahead would revive the sentiment in residential segment. While Sensex came close to hit the 60,000 mark, the sluggish sentiment amid a cold response to the RBI outcome kept the rally under check.

Technically, after a long time, the Nifty reclaimed the level of the 200-day SMA and has formed a bullish candle on daily and weekly charts. We are of the view that 17,500 and 17,375 would act as key support areas for the index while 17,700 -17,800 could act as resistance zone.

Meanwhile, the Bank Nifty has also formed a bullish candle on weekly charts and is successfully trading above the 50-day SMA. For the index, 40,700 or the 50-day SMA could be the sacrosanct support zone and above which it could move up till 41,500-41,700.

The Bank index continued its rally on the upside and any dip was bought confidently by the bulls. The index surpassed the level of 40,000 last week and post that there has been a one-way rally.

The index is now trading around the next resistance zone of 41,000 and if we sustain above this in the upcoming week we expect the rally to continue higher toward the 42,000 mark. The lower-end support is visible at the 40,600-40,500 zone which will act as a cushion for the bulls.

Markets settled marginally higher in a volatile session, in continuation of the prevailing trend. After the initial downtick, Nifty surged strongly after the MPC’s unchanged stance on key rates, however profit taking around 17,600+ zone capped the upside. Finally, it settled at the 17,599 level; up by 0.24%.

A mixed trend on the sectoral front kept the traders busy wherein realty, financials and auto posted decent gains. The broader indices edged higher and gained in the range of 0.5%-0.8%.

The stability on the global front has eased some pressure and now the focus would shift to earnings for cues. We expect some consolidation in Nifty citing multiple hurdles around the 17,600-17,700 zone. However, the rotational buying across index majors would help in maintaining the positive tone. Meanwhile, participants should continue with a stock-specific approach with a focus on overnight risk management.

The surprising policy move to pause interest rate hikes has had a convincing effect on bond yields and the stock market. A plausible peaking of the interest rate will have an positive effect on the financial markets, which was reflected in today’s drop in yield and marginal upside of domestic stock market when the Asian market was negative.

However, the trend to continue during the year will depend on a consistent fall in inflation, which is forecasted to stay elevated above the FY24 target. Given the high gap between current and target inflation, the RBI will have to hold the rates high for a long period, limiting the upside.

The Nifty continued with the positive momentum and closed with gains for the fifth consecutive trading session. It has managed to close above the falling channel which is a positive sign.

The Daily Bollinger bands are contracting which indicates that the upside might be limited from heron. Also on the hourly momentum indicator we can observe negative divergence which indicates loss of momentum on the upside. After witnessing 700 points rally in the last five trading sessions a consolidation is highly likely.

Thus, considering the above factors we expect the Nifty to consolidate over the next few trading sessions and any dip towards the support zone of 17,500 – 17,430 should be used as an opportunity to create fresh long positions.

Indian rupee ended higher at 81.89 per dollar against previous close of 82.

Indian benchmark indices ended on a positive note amid volatility with Nifty around 17,600.

At close, the Sensex was up 143.66 points or 0.24% at 59,832.97, and the Nifty was up 42.20 points or 0.24% at 17,599.20. About 2310 shares advanced, 1121 shares declined, and 110 shares unchanged.

Adani Enterprises, Bajaj Finance, Tata Motors, Bajaj Finserv and Sun Pharma were among the biggest gainers on the Nifty, while losers were HCL Technologies, ONGC, Axis Bank, Tech Mahindra and ICICI Bank.

Among sectors, realty index added 3 percent, auto index gained 1 percent, while pharma, capital goods, oil & gas, power up 0.5 percent each. However, FMCG, IT and metal down 0.5% each.

The BSE midcap and smallcap indices rose 0.7 percent each.

-Buy rating, target at Rs 1,100 per share
-Strong performance on volumes; margin improvement on track
-Revenue growth improved to double digits YoY

Godrej Consumer Products touched a 52-week high of Rs 978.50 and quoting at Rs 966.70, down Rs 2.95, or 0.30 percent.

-Buy call, target at Rs 900 per share
-Q4 disbursement grew 65 percent YoY, well above our estimate
-Auto finance disbursement grew 39 percent YoY
-New business disbursements (23 percent QoQ) formed 22 percent of total

Cholamandalam Investment and Finance Company touched a 52-week high of Rs 846 and was quoting at Rs 844, up Rs 62.50, or 8 percent.

-Equal-weight call, target at Rs 110 per share
-Q4 sales volume declined 2 percent YoY but saw seasonal QoQ improvement
-Exports remained in a lull but domestic demand picked up
-European business sales remained lower than production

Tata Steel was quoting at Rs 104.35, down Rs 0.50, or 0.48 percent.