Closing Bell: Nifty ends above 11,900, Sensex up 326 pts as RBI keeps stance accommodative, holds rates

Taking Stock: Dovish RBI policy boosts market; Nifty closes above 11,900 levels

Sectorally, the action was seen in Banks, Finance, Public Sector, and Capital Goods space while some profit taking was seen in Realty, Healthcare, and FMCG stocks.

Nifty on the weekly chart formed a long bull candle and the whole chart pattern now indicate a larger positive sequence of higher tops and bottoms. Hence, more upside could be in store in the near term to form a yet another higher top reversal at the new swing highs.

The underlying trend of Nifty continues to be positive. The overall chart pattern signal more upside for the market in the near term. The upside targets to be watched for the coming week at 12250. Immediate support is placed at 11800.

This week was marked with strong out-performance by Financials, with accommodative RBI policy measures and further evidence of rebound in economic activity driving optimism on asset quality front. NSE100 & NSE200 have gone past their early Sep highs, marking confirmation of uptrend with higher highs & lows formation. As Nifty approaches lifetime highs, we can expect rotation of performance among sectors with sideways movement in broader indices and a consolidation of strong market performance. Defensive sectors can be expected to outperform in the near-term in such a scenario. Overall fund flow picture remains strong with DIIs & FIIs net buyers incrementally over the last few sessions.

The dovish monetary policy from the RBI and supportive global cues aided sentiments for the markets as the Nifty index ended higher by 0.8% at 11,932 levels. However, the buying interest was only limited to large caps as broader markets underperformed for yet another day wherein both Midcap and Smallcap ended lower by 0.5% and 0.3% respectively. On the sector front, Banking and Finance stocks were the clear winners, followed by IT and Oil & Gas. On the flip side, Realty, Healthcare, and Telecom ended with losses.

We feel the recent buoyancy in the banking pack may help the index to inch higher but traders should maintain extra caution in the selection of stocks as we’re seeing limited participation from the index majors. Besides, with the earnings season gaining pace, we can’t rule out the possibility of erratic swings in the stocks.

The markets maintained an upward trajectory shortly after its tepid opening. We are entering into the weekend with a strong closing where the Nifty is not very far from the 12000 price mark! 12200-12300 is a potential target which the index is capable of achieving during the course of this month. 11400 is a good support level.

The rally continued on the seventh straight day on October 9 with Nifty closing above 11900 and Sensex added over 300 points.

Sensex and Nifty ended near the day's high mainly supported by the banking names after Reserve Bank of India kept the Repo Rate unchanged at 4% and continued with the accommodative stance.

At close, the Sensex was up 326.82 points or 0.81% at 40509.49, and the Nifty was up 79.60 points or 0.67% at 11914.20. About 1216 shares have advanced, 1426 shares declined, and 164 shares are unchanged.

Wipro, Axis Bank, SBI, ICICI Bank and HDFC Bank were among major gainers on the Nifty, while losers were Grasim Industries, UPL, Hindalco, Sun Pharma and SBI Life Insurance.

Among sectors, bank, infra, IT indices ended in the green, while selling witnessed in the FMCG, auto, metal and pharma indices.

Crude oil prices are trading firm, as Hurricane Delta has forced closure of crude oil platforms in the Gulf of Mexico, with about 1.7 million bpd, or 92% of the total U.S. Gulf crude output. Crude oil also found support from continued hopes that U.S. lawmakers will agree on a pandemic relief package, and this is likely to provide support to energy demand.

Crude oil found support from stimulus hopes in the US, and production closure, due to hurricane Delta. We expect the price rally to halt, on account of demand concerns, due to the covid pandemic, and increasing supply from OPEC nations. WTI crude oil prices are likely to find support around $38.45-37.80 per barrel. Meanwhile, stiff resistance could be seen around $41.97-43.08 per barrel.

As expected, the MPC decided to maintain a status quo on benchmark rates. The RBI has reiterated the non-disruptive conduct of the government borrowing programme. To this effect, the OMO amounts have also been increased to Rs 20,000 crore. RBI’s willingness to look through the current phase of high CPI and future expectation of CPI coming closer to the RBI’s target should work as a strong anchor for bond yields. This indeed is a pre-Diwali Dhamaka for bond markets.

Larsen & Toubro (L&T) share price rose nearly 4 percent on October 9 after foreign broking house Jefferies has maintained buy rating with a target at Rs 1,280 per share. Broking house feels that, in two years, company should have surplus cash flows to reward shareholders.

The management has not met its five-year target of 18% RoE by FY21, while prudent capital allocation, E&C revenue recovery and improving RoCE are the triggers, reported CNBC-TV18.

As per the latest data available at exchanges, total 127.86 crores shares have been offered at different prices, with maximum bids happening in between Rs 145 - Rs 160 as compared to floor price of Rs 87.25. We expect that the discovered price may end up being much higher than the floor price and there could be a possibility of the promoters coming out with a counter offer.

Currently the promoters own 50.14% of the shares in the company and will need to increase their holdings to at least 90% for successful delisting. The Reverse Book building process for price discovery is currently under progress and today is the last day for bidding. We believe that it would be prudent for retail shareholders to participate in the reverse book building process.

: Total 134.6 crore shares have been tendered so far in the Vedanta delisting offer. 72 crore shares tendered up to Rs 155 per share, 21.2 crore at Rs 160 per share and 32 crore at Rs 320 per share, reported CNBC-TV18.