Indian markets extended their rally for the second consecutive session on October 8 after the Reserve Bank of India left policy rates unchanged and seem to gradually move towards policy normalisation.
Positive Asian cues and buying in IT stocks as well as heavyweight Reliance Industries also supported the rally.
The Sensex closed 381.23 points up at 60,059.06, while the Nifty50 gained 104.90 points to 17,895.20. The Sensex gained 2.2 percent and the Nifty 2.6 percent during the week.
The broader markets also ended in the green. The Nifty Midcap 100 index gained 0.43 percent and the smallcap 1.23 percent.
"Domestic indices traded higher with optimism underpinned by dovish RBI policy and mixed global cues due to US jobs data awaited later in the day," said Vinod Nair, Head of Research at Geojit Financial Services.
The six-member monetary policy committee (MPC) decided to keep repo rate unchanged at 4 percent and reverse repo rate at 3.35 percent.
The RBI would continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of Covid-19 on the economy, while ensuring that inflation remains within the target going forward, governor Shaktikanta Das said.
Also read: RBI policy: FY22 CPI inflation target lowered to 5.3% from 5.7%
"FY22 GDP growth was maintained at 9.5 percent while (the RBI) trimmed inflation worries by lowering CPI forecast from 5.7 percent to 5.3 percent, providing the push to the market," Nair said.
On the sectoral front, the IT index hogged the limelight, gaining 2 percent ahead of TCS quarterly numbers due later in the day.
The PSU Bank index was up 1.65 percent, while realty and FMCG succumbed to selling pressure.
Reliance Industries, whose market capitalisation neared Rs 18 lakh crore-mark, was the biggest gainer with 3.84 percent gains.
Wipro, Infosys, Tata Motors, Tech Mahindra, HCL Technologies and TCS were the other gainers, rising 1-3 percent.
However, SBI Life Insurance, NTPC, Coal India, HUL and Shree Cements were biggest Nifty losers, falling more than a percent each.
Tata Motors, Reliance Industries, Tata Steel, TCS and Infosys were the most active shares. In the F&O segment, Indian Energy Exchange, Dixon Technologies, MRF, MCX India and IndiaMART InterMESH were top gainers, rallying 5.5-8.5 percent gains.
On the global front, Asian counterparts also settled higher, with Japan's Nikkei rising 1.34 percent and Australia's ASX 200 gaining 0.87 percent. Hong Kong's Hang Seng was up half a percent while China's Shanghai Composite, which returned to trade after a week-long holiday, gained seven-tenth of a percent.
The systematic investment plan (SIP) inflow crossed Rs 10,000 crore for the first time in September 2021 at Rs 10,351 crore against Rs 9,920 crore in the previous month, Association of Mutual Funds in India (AMFI) data shows,
However, net inflow in equity and equity-oriented mutual funds was at Rs 6,456.4 crore in September, lower than Rs 8,056.79 crore in the previous month.
The Nifty formed a Doji pattern on the daily charts as the closing was near the opening level. On the weekly scale, the index formed a bullish candle.
"The index remained in a narrow range of 100 points throughout the day but buying was seen at every intraday declines," said Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services.
The index has to hold above 17,850 for an up move towards 18,000 and 18,200 levels, whereas on the downside, support is seen at 17,777 and 17,650 levels, he said.
On option data, the maximum Put open interest was seen at 17,000 followed by 17,500 strike, while maximum Call open interest was seen at 18,000 followed by 18,500 strike.
Minor call writing was seen 18,200 then 18,500 strike, while Put writing was seen at 17,900 then 17,800 strike.
Option data indicated that the Nifty50 could see a broader trading range of 17,400-18,200 and the immediate trading range could be 17,600-18,000, Taparia said.
India VIX, which measures the expected volatility in the market, fell 3.14 percent from 16.15 to 15.65 levels, giving buying support to the broader market. “VIX needs to cool down below 15-14 zones for the market’s smooth ride to continued," Taparia said.
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