Closing Bell: Sensex rises 582 pts, Nifty around 17,550; all eyes on RBI meeting

Taking Stock: Sensex up 582 points, Nifty around 17,550 ahead of RBI policy

The BSE midcap index ended on a flat note, while smallcap index added 1 percent.... Read More

For the first time in 2023, the market has gained four consecutive sessions. The Sensex and Nifty end the day at their highs, led by financial heavyweights and ITC. Nifty is showing bullish momentum, and closed above 17,500 and above that, we can expect a short covering move towards 17,770. On the downside, 17,300 and 17,220 are important support levels.

Banknifty is showing relative strength where 41,250 is an immediate target. Above 41,250, we can expect a rally towards 41,666, while on the downside, 40,400 and 40,200 are important to support levels.

We've seen a short-covering move, and there's still room for more short covering, but the market needs new longs with institutional investors backing them up. In the short term, key events such as RBI policy, macroeconomic data, and Q4 earnings will determine the market's direction from here.

Domestic indices traded in positive territory throughout the day, despite mixed global cues on back of healthy macro data. Manufacturing PMI hit 3-month high to 56.4 in March, indicating strong demand. Additionally, net direct tax collections have exceeded Union Budget estimates by 17%, further confirming robust economic growth.

Nifty opened higher and continued to strengthen throughout the session to finally close near day’s high with gains of 159 points (+0.9%) at 17,557 levels.

Except PSU Banks and Auto, all sectors ended in green. Buying was seen in IT and FMCG sector stocks.

While the trend looks positive, upside could be limited given the sharp rise of 3% in Nifty in last four days and the big event of RBI policy outcome on Thursday. After a long period, midcaps have shown momentum and hence action could be seen in the broader markets.

The major indices maintained their upward trend for the fourth day in a row, with the Sensex rising by 582 points and the Nifty finishing 161 points higher. IT, FMCG, and financial sector indexes all saw gains of above 1%, while PSU banks and auto companies experienced intraday profit booking.

Technically, after a solid start, the market maintained its upward trend throughout the day. For the first time in a long time, the Nifty closed above the 200-day SMA level and created a long bullish candle on the daily charts, both of which are generally encouraging signs.

Although, we believe that the market's short-term structure is strong, transitory overbought situations may cause some profit-taking at higher levels. The current resistance level for day traders would be 17,600-17,650/60,000-60,100, while the important support area would be 17,450-17,400/59,400-59,200. The uptrend would be at risk if it fell below the 17,400/59,200 level.

The Nifty resumed with it up move after a day of consolidation and achieved our short term target of 17,500. On the daily charts we can observe that the Nifty has managed to close above the key daily moving averages which is a sign of strength.

Currently it is trading around the upper end of the downward sloping channel and a break above that shall lead to a further upside. On the hourly charts, we can observe a negative divergence on the hourly momentum indicator which is a sign of caution however it needs to be confirmed by weakness in the price action and we see no evidence of it as of now and hence we shall continue to ride the up move.

In terms of levels, 17,410 – 17,350 shall act as a crucial support, while 17,625 – 17,650 is the immediate hurdle zone and the short-term target.

The domestic market is displaying resilience, unaffected by the weaker global peers, thanks to strong banks and NBFCs quarterly numbers and the windfall tax cut. Additionally, the recent US data revealed a softening in the labour market and declining factory orders, increasing the likelihood of a pause in rate hikes by the Federal Reserve.

The RBI is expected to announce a 25-basis point rate hike in its policy announcement on Thursday before taking a pause, positive for the market.

With Consumer Price Inflation (CPI) staying doggedly over the 6% tolerance threshold of the central bank for January (6.52%) and February 2023 (6.44%), the RBI could consider hiking rates marginally by another 25 bps in the MPC tomorrow. This would take the repo rate to 6.75% in a bid to cool down inflationary pressure in the economy, unleashed post hardening of commodity prices due to the Russia Ukraine war.

Rate hikes could peak out at a max repo rate of 7% in later quarters of FY 23-34 depending on how quickly the CPI comes below 6%.

The Indian rupee gained following stronger Asian currencies backed by lower US Treasuries and the greenback. The dollar inflows in the start-up companies and corporate bonds also pulled the rupee above 82.

Going ahead, the focus will remain on the RBI monetary policy decision tomorrow.

Technically, spot USDINR has support at 81.62 and resistance at 82.35.

Indian rupee ended 33 paise higher at 82 per dollar against Monday's close of 82.33.

Benchmark indices ended higher on April 5 with Nifty closing around 17550.

At close, the Sensex was up 582.87 points or 0.99% at 59,689.31, and the Nifty was up 159.00 points or 0.91% at 17,557. About 2540 shares advanced, 911 shares declined, and 106 shares unchanged.

Top gainers on the Nifty included Larsen and Toubro, Coal India, Hero MotoCorp, Bajaj Auto and HDFC, while losers included Eicher Motors, M&M, IndusInd Bank, Adani Enterprises and NTPC.

Among sectors, capital goods, FMCG and information technology indices rose 1-2 percent, while selling was seen in the auto, power and PSU banks.

The BSE midcap index ended on a flat note, while smallcap index added 1 percent.

-Buy call, target at Rs 1,420 per share
-Advances growth surprises positively; LDR expands 233 bps
-Retail advances & small/mid corporate segment would have driven advances growth
-Deposits growth remained within steady 3-4% sequential run-rate
-Expect broadly stable NIM for Q4
-Credit cost is likely to moderate further QoQ
Expect NII growth of 18% YoY, operating profit growth of 18% YoY

IndusInd Bank was quoting at Rs 1,067.00, down Rs 12.15, or 1.13 percent on the BSE.

Indian Rupee appreciated on rebound in domestic equities and a weak dollar. Dollar fell on disappointing economic data from US. US JOLTS job openings declined to 9.931 million in February 2023 compared to 10.563 million in January 2023.

US factory orders declined by 0.7% in February 2023 compared to -2.1% in January 2023. This raised expectations that Fed may hike interest rates just one more time before taking a pause. However, domestic macro-economic data capped sharp gains in Rupee. India’s services PMI declined to 57.8 in March 2023, missing forecast of 58.3 and a reading of 59.4 in February 2023.

We expect Indian Rupee to trade with a positive bias on a weak greenback and positive domestic markets. However, surge in global crude oil prices may cap the upside. Investors may remain cautious ahead of RBI’s monetary policy decision tomorrow.

There are expectations of a 25-bps repo rate hike before the central banks takes a pause. Traders may also remain cautious ahead of US ADP employment and ISM services PMI data. Market participants may remain alert ahead of US non-farm payrolls report later this week. USDINR spot price is expected to trade in a range of Rs 81.50 to Rs 82.50 in the near term.

SKF India has completed acquisition of 26% stake or 2,600 equity shares in Cleanmax Taiyo, from Clean Max Group.

SKF India was quoting at Rs 4,330.60, up Rs 61.50, or 1.44 percent on the BSE.