Rupak De, Senior Technical Analyst at LKP Securities
Nifty snapped its losing streak as the index posted a gain after seven consecutive days of correction. On the lower end, it found support at 16800 and moved up. On the daily chart, the index has formed a bullish engulfing pattern. The daily RSI is seen to be entering the bullish crossover.
Going forward, the trend may remain bullish with an upside potential of 17300/17500. On the lower end, 16950/16800 may continue to act as crucial support for the short term.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services:
RBI in its policy meeting raised its benchmark repo rate by 50 basis points to 5.9% which was in-line with market expectation. Since May’22 RBI has raised interest rate by 190bps and expect repo rate to be raised to 6.5% in this cycle.
It expect inflation to come down close to its target of ~4% over a two-year period and projected real GDP for FY23 at 7%. Post RBI’s commentary, Nifty bounced in green and gained strength throughout the session. The rally was especially seen in banking sector stocks. This has also given some support to falling rupee which had depreciated by 7% since April’22.
With most key events now behind, market finally found some strength on Friday. After 7 consecutive fall, Nifty witnessed strong rally and closed with gains of almost 300 points. It also reclaimed the 17,000 zones, making the short term technical view positive.
Nifty can now move towards 17,500-17,700 zones with key support around 17,000 and 16850. Auto and consumption sectors would be in focus ahead of monthly sales data and high demand in the ongoing Navaratri festival. Pharma sector is seeing some value buying as market focused on defensive names in times of global uncertainty.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities
What lifted the market sentiment was the RBI's policy rate hike of 50 bps that came in as expected and its comment that India's economy remains on strong footing despite global headwinds. The relief rally was backed by investors' preference for growth-driving stocks from banking, automobile, realty & metal space.
However, global macro factors will continue to dictate the domestic market sentiment going ahead as any fresh spell of negative news could once again trigger the downward spiral. Technically, after a sharp selloff the Nifty took support near 16800 and bounced back sharply.
On daily charts, the index has formed a long bullish candle, and also formed a promising Hammer candlestick formation on weekly charts which is broadly positive.
For the trend following traders the 200- day SMA (Simple moving Average) and 16900 would act as a sacrosanct support zone. Above the same, the reversal wave is likely to continue till 17250. Further upside may also continue which could lift the index till 17400. On the flip side, below 16900, uptrend would be vulnerable and on further decline the index could slip till 16800-16700.
Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities:
Post RBI raises repo rate by 50 bps - stepping up its fight against persistently high inflation, markets gained strong momentum as governor states economic activity are in stable mode with inflation number inline with RBI expectation and manageable range while geo political issues led to currency risk but bearable as of now.
Regarding liquidity concern he says we are in surplus to manage the situations. This fired the bulls to cover up all losses made in the last 3-4 days on index. Technically on the index we see major hurdles at 17327 mark and Nifty will be out of the woods only above 17707 mark.
Vinod Nair, Head of Research at Geojit Financial Services.
An in-line rate hike along with the RBI’s confidence in the economy’s growth momentum aided the domestic market to alter the seven-day losing streak.
The decision to retain inflation at 6.70% with a marginal cut but a healthy GDP forecast of 7.0% indicates the resilience of the Indian economy.
Although the commentary warned about prevailing risks to the domestic economy from the global economy, the MPC refrained from sounding very hawkish. Continuation of the policy stance as 'withdrawal of accommodation' indicates more rate hikes in the future, but data-driven.
Rupee Close:
Indian rupee closed 50 paise higher at 81.35 per dollar on Friday against previous close of 81.85.
Market Close:
Indian benchmark indices ended sharply higher on September 30 with Nifty closing above 17,000 after Reserve Bank of India (RBI) announced repo rate hike by 50 bps.
At Close, the Sensex was up 1,016.96 points or 1.80% at 57,426.92, and the Nifty was up 276.20 points or 1.64% at 17,094.30. About 2283 shares have advanced, 1058 shares declined, and 95 shares are unchanged.
Hindalco Industries, Bharti Airtel, IndusInd Bank, Bajaj Finance and Kotak Mahindra Bank were among the top gainers on the Nifty. However, losers included Shree Cements, Asian Paints, Britannia Industries, Coal India and Dr Reddy’s Laboratories.
All the sectoral indices ended in the green with auto, power, capital goods, bank, realty and metal up 1-2 percent.
BSE Midcap and Smallcap indices added 1 percent each.
Jefferies View On Power Grid
Research firm Jefferies has maintained buy rating on Power Grid Corporation with a target at Rs 260 per share.
The government has rejecting proposal to buy PFC’s stake in REC is positive, while EPS dampener is behind the company.
The transmission spend should pick up ahead, said Jefferies.
The beneficiary of asset monetisation & 6.6% dividend yield is added sweetener.
The reported RoE should improve to 19% from 17-18% & move higher as payout increases, reported CNBC-TV18.
Jefferies On SRF
Broking house Jefferies has kept hold rating on SRF and raised the target price to Rs 2,290 from Rs 2,200 per share.
The channel checks indicate domestic & export refgas prices are coming off lifetime peaks. The MT growth outlook is robust on the back of its 5-year Rs 12,000 crore capex plan in chemicals.
Brkong house raises FY23 EBITDA estimate by 5% on refgas strength, reported CNBC-TV18.
BSE Smallcap index rose 1 percent supported by the Anant Raj, Transformers And Rectifiers and RPG Life Sciences
Mini Nair, Chief Financial Officer at Geojit Financial Services:
RBI’s rate hike was in expected lines as inflation remains elevated coupled with continued global uncertainties. This hike is also to keep in pace with what’s happening across the globe. But in contrast to many other countries, economic activities in India are stable now and most of the sectors are holding back well.
Growth in credit offtake driven by the sustained retail and improving corporate credit is a proof of that. Overall, I think the rate hike is a positive communication as the hike will help to control the inflation and to protect the currency.
CLSA On Hindalco Industries
Brokerage firm CLSA has reiterated buy rating on Hindalco Industries with a target at Rs 525 per share.
The downstream demand concerns and lower LME lead to underperformance. The stock has corrected over Novelis’ profitability concerns and volatile aluminium prices.
Expected weakness in Q2 earnings also weighed on the stock, said CLSA.
The concerns were overdone with share price indicating aluminium price of USD 1,850/tonne.
Any uptick in metal prices or clarity on Novelis’ outlook would likely to lead to a re-rating, reported CNBC-TV18.
ALERT | Eurozone September CPI inflation at 10% YoY and Preliminary September Core CPI at 4.8%
Market at 3 PM
Indian benchmark indices were trading higher with above 17100.
The Sensex was up 1,098.51 points or 1.95% at 57508.47, and the Nifty was up 306.70 points or 1.82% at 17124.80. About 2205 shares have advanced, 965 shares declined, and 110 shares are unchanged.
Dilip Buildcon has declared as L-l bidder for the tender floated by the Gujrat Metro Rail Corporation (CMRC) Limited.
SRF commissions facility to produce 300 MTPA of P38 at Dahej
SRF has commissioned its facility to produce 300 MTPA of P38 at Dahej. The aggregate cost of the project is Rs 58 crore. The board had given its approval for a project in January 2022.
SRF was quoting at Rs 2,509.05, down Rs 37.30, or 1.46 percent on the BSE.
Auto sales to continue driving in the fast lane in September
Demand momentum in the sector is likely to continue in the second half of this fiscal, largely driven by robust performance in passenger and commercial vehicle segments while experts expect the two…... Read More
Roopali Prabhu, CIO and Co-Head Products & Solutions, Sanctum Wealth
The 50bps rate hike was in line with our expectations. We believe the RBI could pause and be data dependent going forward.
The governor highlighted that 67% of depletion in forex reserves was on account of change in valuation and not due to intervention, which highlights the inherent strength of the rupee relative to other emerging market currencies. A resilient rupee reinforces India economy’s relative strength.
Rupee extends gains, recovers more than 50 paise against the dollar to trade at 81.18
As Sensex surges 1300 points, take a look at the top contributors
Pranjal Kamra, CEO - Finology Ventures
Continuing withdrawal of its accommodative stance, the RBI has hiked the repo rate today by 50 basis points to 5.9 percent, an anticipated move welcomed by the markets. Interest rate hikes by advanced economies like the US & UK have given rise to the fear of recessionary situations and this fear has taken over stock markets all around the world. Emerging markets too are facing the brunt of this, in addition to a strong dollar, a slowdown in global growth, elevated food and energy prices and debt crisis. However, the RBI governor is of the opinion that India remains comparatively more resilient than its peers. With an FY23 GDP forecast of 7 percent, it remains to be seen how the central bank strikes a perfect balance between inflation control and growth.
India has got responses from up to five countries for rupee settlement mechanism, more interested: RBI Dy Guv
India has received responses from four to five countries for its mechanism for international trade settlement in rupees, while other nations have also shown interest, a deputy governor at the Reserve Bank of India said on September 30.
“The response has been fairly good but since the process involves a lot of vetting at the level of banks, at the level of the central bank, at the level of the government, the initial process is taking some time,” T Rabi Sankar told reporters in Mumbai at a post-policy interaction. Read more
Relief rally in European markets; Stoxx 600 up 1%
Goa Carbon Temporarily Shuts Down Salcete-Goa Unit For Maintenance
In an exchange filing, the company said, "Production at the Goa unit located at St. Jose de Areal, Salcete-Goa has been temporarily shut down for minor planned maintenance work from 29th September 2022."
HAL clarifies:
News reports dated September 27 about company signing agreement with Honeywell are incorrect.No contractual arrangements have been made with Honeywell
Markets at 2 PM
Sensex is up 1,122.61 points or 1.99 percentat 57,532.57. Nifty is up 320.20 points or 1.90 percentat 17138.30. About 2125 shares have advanced, 999 shares declined, and 124 shares are unchanged.
Vikas Garg– Head of Fixed Income, Invesco Mutual Fund
Amidst challenging global monetary policy backdrop, RBI stays with a 3rd consecutive rate hike of 50 bps and keeps a tight vigil on domestic inflation. Continuation with “withdrawal of accommodation” signals more rate hikes to come. External factors holding well as of now but needs to be monitored closely. Re-assurance on ample systemic liquidity provides relief to the shorter segment. Overall, in line with market expectations as of now but we expect market volatility to remain high with fast evolving global backdrop.
Atanuu Agarrwal, Co-founder, Upside AI
The rate hike is in line with expectations, and frankly the Federal Reservehasn'tleft central bankers around the world with too many options. Real rates are still negative, however, with commodity prices cooling off and supply chains smoothening, inflation in India may moderate a bit in the near-term. Geopolitical events, including, escalation of the Russia-Ukraine conflict, and stronger demand from China waking up remain key upside risks to inflation.
Dhiraj Relli, MD & CEO, HDFC Securities
The MPC voted to raise the repo rate by 50 bps taking it to 5.9% as widely expected, while remaining focused on withdrawal of accommodation. A higher rate hike is justified in the backdrop of inflation remaining at elevated levels with the projected trajectory being above RBI's target during the entire forecast horizon.
Economic growth has remained resilient in the face of an adverse global environment. The recent sharp depreciation in rupee (although well managed compared to other emerging countries) might have weighed on members’ decision in favour of larger rate hike, addressing external sector imbalance and reducing the interest rate differential.
Unchanged inflation forecast at 6.7% for FY23 (and 5% in Q1FY24) is reassuring with high average crude oil price of USD 100 per barrel considered in this, providing a cushion. FY23 GDP projection was lowered marginally from 7.2% to 7% for FY23. Overall it was a prudent policy announcement with no negative surprises which is reflected in the impact on 10 year yield and stock markets. The next stage of response could be calibrated; we expect the terminal repo rate would be 6.25-6.40% by FY23 end.
Today’s Stock Market Action
Rupee Updates:
Indian rupee is trading higher by 28 paise at 81.57 per dollar against previous close of 81.85.
Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank
Repo policy rate hike of 50bps is in line with our expectations. Given the global adverse conditions we remain wary on the pressure on INR and hence the need for continued rate hikes.
We expect the MPC to hike 35bps in the December policy. However, with inflation expected to fall within 6% threshold in 4QFY23, we expect the MPC to probably pause and assess the lagged impact of monetary tightening.
BSE Power index gained 1 percent supported by the Adani Green, ABB, Adani Power
Elara Capital View on Abbott India
Abbott India showcases a balance sheet trait of an MNC and growth profile of an Indian company. Its strong set of brands, efficient field force and patient-centric approach have helped it overcome the threat from generics in its key brands.
At CMP of Rs 19,188, the stock trades at 42x FY23E P/E and 36x FY24E P/E. We reiterate Buy with a Target Price of Rs 24,000 unchanged) based on 45x (unchanged) FY24E P/E.
Abbott India was quoting at Rs 19,087.40, down Rs 100.55, or 0.52 percent on the BSE.
Shishir Baijal, Chairman & Managing Director, Knight Frank India:
The RBI stays committed to control inflation and bring it closer to the comfort level of 4% by continuing to increase the repo rate and tightening the liquidity condition. Although, global crude and commodity prices have softened a bit, revival in domestic demand along with sharp rupee depreciation would continue to exert price pressures leaving no choice for the RBI but to raise REPO Rate by another 50 BPS taking the total rate hike since May 2022 to 190 BPS. While this is expected in line with the global trend, it will have its impact on the sentiments across all buying categories, especially in the wake of the current festive season.
Tight liquidity conditions along with the repo rate hike would lead to a significant rise in the cost of funding, impacting home loan rates as well. Going by the current trends we expect about 50% of this will be passed onto the home loan borrowers. A rise in home loan rates will further impact affordability across the markets. As per Knight Frank affordability index will deteriorate by another 2% This might slowdown home buying decision for a short to medium term. However, we hope, India’s steady economic growth and revival in consumer’s sentiment towards the economy will bring back confidence amongst the end users and support their home buying activities.
Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS:
The RBI increased the repo rate by 50bps, in line with expectations, with core inflation being sticky and continuing to hover over the upper tolerance limit, unfavorable global conditions, and the Indian rupee depreciating against the dollar. The RBI has retained its inflation estimates for FY23, with relief visible only from Q4 onwards. It has also tweaked its growth estimates to 7% for FY23. With RBI data indicating strong credit growth, currently at a multi-year high, we believe most banks, especially those with a higher share of the floating rate will be better placed in the rising interest rate environment.
However, the lagging deposit growth remains a cause of concern. While India is in a better place than its global peers, with domestic indicators showing continuous improvement, global factors such as ECB and Fed’s indication of steeper rate hikes in the coming policies will continue to force RBI to front load interest rates in the coming MPC meetings.
Market at 1 PM
Benchmark indices were trading at day's high with Nifty above 17000.
The Sensex was up 955.96 points or 1.69% at 57365.92, and the Nifty was up 274.50 points or 1.63% at 17092.60. About 2015 shares have advanced, 1068 shares declined, and 119 shares are unchanged.
Oil poised for weekly gain
Oil prices were little changed during Asian trade on Friday, though headed for their first weekly gain in five weeks, underpinned by a weaker U.S. dollar and the possibility that OPEC+ may agree to cut crude output when it meets on Oct. 5.
Brent crude futures for November, which expire on Friday, inched down 13 cents or 0.15% to $88.36 a barrel by 0625 GMT, after losing 83 cents in the previous session. The more active December contract was up 7 cents, or 0.1%, at $87.25.
U.S. West Texas Intermediate (WTI) crude futures for November delivery rose 0.06%, or by 5 cents, to $81.28 a barrel, after falling 92 cents in the previous session.
Buzing
Tejas Networks has announced the merger of Saankhya Labs Private Limited and Saankhya Strategic Electronics Private Limited through a process approved by the National Company Law Tribunal (NCLT).
Tejas Networks acquired 64.40 percent of shares of Saankhya Labs Private Limited in July 2022.
The Company will issue 3,871,084 equity shares of Tejas Networks to Saankhya Labs shareholders holding 35.60 percent equity shares, using the swap ratio of 112 shares of Tejas Networks for 100 shares of Saankhya Labs, according to a statement from the company.
Nifty Bank index rose 2.4 percent supported by the PNB, Bank of Baroda, Federal Bank
Adani Green commissions world’s largest hybrid power plant
Adani Green Energy has commissioned 600 MW World’s largest co-located Wind-Solar Hybrid power plant ‘’Hybrid Power Plant’’ at Jaisalmer, Rajasthan.
The plant has Power Purchase Agreements (PPA) with SECI at Rs 2.69/kwh for 25 years.
Ajit Kabi, Banking Analyst at LKP Securities.
The 50bps hike in policy rate to 5.9% was expected. However, the inflation estimates were the key monitorable. The inflation was expected to be at 6% for the second half of the financial year and GDP growth is expected to be at 7% for the entire fiscal.
Factoring the daunting challenge of inflation, the repo hike is likely to be a welcome move. The rate hike was earlier anticipated and expected to be in the indices price.
Elara Capital View on VRL Logistics
The proposed transaction strengthens focus on the GT segment’s core competency and will improve VRLL’s cash inflow, profitability andreturn ratios. With this transaction, VRLL will have divested a majority of the non-core business, including the recent sale of wind power and air charter operations.
We remain confident on the growth prospects of the core business and expect FY22-24E revenue and earnings CAGR of ~20% each. We reiterate Buy with a revised Target Price of Rs 780 (from Rs 813), adjusted for the absence of the bus segment.
Nish Bhatt, Founder & CEO, Millwood Kane International
The 50 bps hike by the RBI was very much on expected lines. Central banks across EMs and DMs are hiking rates to control the sticky inflation. The easy monetary policy has led to inflation rising to levels never seen in the past few decades. It is pertinent to keep the policy stance at the withdrawal of accommodation as we need further tightening of policy to control inflation.
Despite the cumulative 190 bps hike since May this year, it is encouraging to see the central bank estimating the growth rate at 7% for FY23. Going forward we expect a few more rate hikes by the RBI before a long pause on rates. India will be among the high-growth economies with the least depreciated policy against the USD. However, a spike in crude prices and geo-political tensions may play spoilsport.
Rupee Updates:
Indian rupee is trading higher by 22 paise at 81.63 per dollar against previous close of 81.85.
BSE Realty index rose 1 percent led by the Indiabulls Real Estate, Phoenix Mills, Godrej Properties
Amar Ambani, Head – Institutional Equities, YES Securities
RBI’s MPC expectedly voted for a 50bps hike, replicating the endeavour of global central banks to protect their currencies from prevalent volatility. The central bank also retained its stance on withdrawal of accommodation, stating that liquidity conditions will remain accommodative given the higher government spending during H2 FY23.
On inflation projections, the CPI forecast for FY23 is retained at 6.7%. Though falling Oil price is a positive, high Food prices pose an upside risk to the inflation forecasts.
On the growth front, RBI downgraded the FY23 GDP projection to 7% from the earlier estimate of 7.2%. Nevertheless, the central bank remains confident of demand remaining supported during H2, thanks to stable private consumption, while rural demand is also picking up.
On the future interest rate moves, though RBI’s stance is more driven by domestic factors, the current landscape of aggressive rate hikes by the Fed and ensuing rupee weakness will compel RBI to closely follow the interest rate moves in the US. RBI will likely raise the repo rate by 35bps in September.
Market at 12 PM
Benchmark indices extended the gains and trading at day's high with Nifty around 17000.
The Sensex was up 634.57 points or 1.12% at 57044.53, and the Nifty was up 183.10 points or 1.09% at 17001.20. About 1894 shares have advanced, 1128 shares declined, and 121 shares are unchanged.
Containe Technologies becomes 393rd to get listed on BSE SME Platform
Containe Technologies became the 393rd company to get listed on the BSE SME Platform on September 30, 2022.
Containe Technologies Limited came out with an initial public offering of 17,44,000 equity shares of Rs 10 each for cash at a price of Rs 15 per equity share, aggregating to Rs 2.62 crore.
The company has successfully completed its public issue on September 22, 2022.
