Closing Bell: Nifty ends above 18,700, Sensex gains 350 pts; all sectors in the green

Taking Stock: Nifty above 18,700 ahead of RBI policy; investors get richer by Rs 2.48 lakh crore

All the sectoral indices ended in the green with capital goods, metal, oil & gas, FMCG, power, realty up 1 percent each.... Read More

The Nifty has recently experienced a positive breakout from a sideways pattern, which is seen as a favorable development. This breakout comes just before the Reserve Bank of India (RBI) announces its rate decision tomorrow. Market participants are anticipating a dovish stance from the RBI governor, contributing to a positive sentiment in the market.

Technically, support for the Nifty is positioned at 18650, while resistance is expected around the range of 18880-18900.

The Bank Nifty remained sideways following a positive start. The undertone of the index is still bullish, maintaining the support of 44000 in a spot where a decent amount of Put writing is seen and resistance is still intact at 44500. After the central bank policy the Bank Nifty is expected to give a move on either side. Upon a decisive move 44500, we might see strong directional upside moves.

The Reserve Bank of India in its upcoming policy meeting on June 8th is expected to continue with its interest rate pause stance. In the previous policy, the MPC clearly stated that its next move would depend on data, and the latest inflation numbers were within the RBI target inflation range.

The CPI inflation data for April came in at an 18 month low of 4.7%. MPC may though continue with withdrawal of accommodation stance. Important to see if there be any changes announced in the inflation and GDP projections for FY24.

Markets rallied sharply and witnessed broad-based buying support ahead of the credit policy with the Sensex ending past the crucial 63000-mark. Upbeat moved prevailed throughout the session as investors are hoping a rate hike pause amid improving domestic macroeconomic situation. All eyes will be on the RBI’s growth outlook and inflation projection for the year, and in case if there is any downgrade in inflation expectations, optimism is likely to persist.

Technically, Nifty clearing the important resistance level of 18650 may intensify the positive momentum. A bullish candle on and a higher bottom formation clearly indicates further uptrend from the current levels.

For the breakout traders now, 18650 would be the key support level to watch out. Above which, the market could rally till 18800-18875. On the flip side, below 18650, uptrend would be vulnerable and below the same, the index could retest the level of 18600-18550.

Investors are becoming more optimistic due to the anticipation of a positive revision in the RBI’s inflation forecast during the ongoing MPC meeting. It is expected that the RBI will maintain its pause on rate hikes, considering the significant improvement in inflation, which has now come within the RBI's comfort zone.

Furthermore, the participation of FIIs as net buyers, after a brief halt, contributed to today's market rally, particularly driven by mid- and small-cap stocks.

Nifty had a small gap up opening which was then followed by a range bound move for a couple of hours. This was predominantly due to Bank Nifty which was trading almost flat in the opening hours. However, the second hour of the trading session brought fresh cheers to bulls with Nifty making fresh highs every hour even when Bank Nifty continued to struggle.

Nifty witnessed fresh hourly breakout above 18650 levels which has now paved the way towards 18800-18850 levels. Bank Nifty has also managed to close above its swing breakout level of 44200 which if sustained can lead to a rise till 45000 levels.

The immediate support is at 18630 levels for Nifty and 43900 for Bank Nifty. The trend for both the indices remains positive.

Indian rupee ended with a gain of 7 paise at 82.54 per dollar against previous close of 82.61.

Benchmark indices ended on strong note on June 7 with Nifty above 18,700 led by buying across the sectors.

At close, the Sensex was up 350.08 points or 0.56% at 63,142.96, and the Nifty was up 127.40 points or 0.68% at 18,726.40. About 2214 shares advanced, 1244 shares declined, and 124 shares unchanged.

Biggest gainers on the Nifty were Britannia Industries, Tata Consumer Products, BPCL, Nestle India and HDFC Life, while losers were Cipla, Kotak Mahindra Bank, Bajaj Finance, M&M and Maruti Suzuki.

All the sectoral indices ended in the green with capital goods, metal, oil & gas, FMCG, power, realty up 1 percent each.

The BSE midcap and smallcap indices also added 1 percent each.

Allcargo Logistics was quoting at Rs 292.75, up Rs 8.55, or 3.01 percent.

The dollar wobbled on Wednesday as chances faded for a rate hike next week by the Federal Reserve, while the Canadian dollar touched one-month highs as traders amped up bets for the country to raise rates and the Turkish lira hit record lows.

The Aussie scaled three-week highs after the Reserve Bank of Australia's decision to raise to 11-year highs on Tuesday and Governor Philip Lowe signalled more rate hikes in the pipeline, despite the greater risk of an economic downturn.

The currency was up 0.1% at $0.6677, having touched an overnight peak of $0.669, its highest since May 16.

Indian Rupee appreciated today on positive domestic equities and some softness in US Dollar. Decline in crude oil prices also supported Rupee. However, a soft tone in Asian and European markets due to an unexpected decline in China’s trade balance capped sharp gains.

The World Bank revised 2023 global growth forecast higher at 2.1% from 1.7% in its June forecast but slashed 2024 growth estimates to 2.4% from previous forecast of 2.7%.

India’s GDP estimates were revised lower 6.3% for FY 2023-24 from 6.6% earlier. US Dollar softened on uncertainty over rate hike by US Federal Reserve in its June FOMC.

We expect Rupee to trade with a slight negative bias as the World Bank trimmed India’s growth forecast as well as concerns over global economic recovery. However, positive domestic markets and weakness in oil prices may support Rupee at lower levels.

Traders may remain cautious ahead of US trade balance data. Market participants may remain cautious ahead of RBI’s monetary policy later this week. RBI is expected to leave the repo rate unchanged at 6.5%. We expect USDINR spot to trade in between 82.20 to 83 in the near term.