BSE Sensex and NSE Nifty 50 ended nearly 2 per cent higher, snapping a 7-day losing streak on Friday. Investors cheered the RBI MPC announcement of the repo rate hike. BSE Sensex ended at 57,427, up 1,017 points or 1.8 per cent. The NSE Nifty 50 ended at 17,094, up 276 points or 1.64 per cent. Stocks of index heavyweights such as Reliance Industries Ltd (RIL), HDFC Bank, ICICI Bank, Housing Development Finance Corporation (HDFC), and Bharti Airtel were among the top index contributors. Broader markets performed in line with equity frontliners. S&P BSE MidCap index gained 1.4 per cent or 341 points to settle at 24,853.94, while the S&P BSE SmallCap index added 1.45 per cent or 406 points to finish at 28,453.
Deepak Jasani, Head of Retail Research, HDFC Securities
India’s Monetary Policy Committee has hiked the benchmark repo rate by 50 basis points—its fourth straight increase to 5.90% – which is the highest in the last 3 years —in continuing efforts to quell inflation in the economy. Nifty formed an engulfing bull pattern on daily charts while forming a bullish hammer pattern on weekly charts despite a 1.35% weekly fall. This could portend an upside bounce in the coming week with 17292 and 17540 being the upside targets. The lack of breakout volumes on Sept 30 is a minor worry. The 16752-16794 band could provide support.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services
With most key events now behind, the market finally found some strength on Friday. After 7 consecutive falls, the Nifty witnessed a 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. The Pharma sector is seeing some value buying as the 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, the uptrend would be vulnerable and on the further decline, the index could slip till 16800-16700.
Vinod Nair, Head of Research, 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 is data-driven.