The domestic equity market ended the week in positive territory on August 5 after the Reserve Bank of India (RBI) raised rates by 50 bps, taking the repo rate to a pre-pandemic level while maintaining its stance as 'withdrawal of accommodation.'
RBI's move was on expected lines which is why the market did not react to it negatively. Besides, the governor's optimistic tone on the economy supported sentiment.
There is a wide consensus among analysts that there will be more hikes going forward as inflation remains sticky, above the RBI's tolerance zone.
Sensex rose as much as 350 points in intraday trade but pared gains significantly and ended 89 points, or 0.15%, higher at 58,387.93. Nifty closed at 17,397.50, up 16 points, or 0.09%. BSE Midcap and Smallcap indices closed 0.09% and 0.23% higher, respectively.
In the 30-share pack, 16 stocks closed in the green and 14 in the red. Shares of UltraTech Cement, ICICI Bank, Bharti Airtel, Power Grid and Infosys ended as the top gainers while those of Mahindra & Mahindra, Maruti, Reliance Industries, IndusInd Bank and Bajaj Finserv ended as the top laggards.
Among the sectoral indices, BSE Telecom rose 1.34% but Utilities (down 1.86%), Power (down 1.59%) and Auto (down 1.12%) suffered losses.
For the week, Sensex and Nifty closed 1.4% each while the mid and smallcap indices settled with gains of 2% each.
Crude oil prices remained subdued as Brent Crude traded below the $95 a barrel mark while the rupee closed 23 paise higher at 79.24.
"Despite the rate hike being on the higher side of the expectations, the market welcomed the RBI's move of 50 basis hike with rising bond yields. Even though metals prices are softening, RBI decided to keep FY23 inflation targets unchanged at 6.7%, which is above the tolerance level. However, given that Q3 and Q4 inflation is anticipated to be between 4% and 4.1%, the market is hopeful for the future," said Vinod Nair, Head of Research at Geojit Financial Services.
Nifty, on weekly charts, formed a bullish candle. Further, daily and intraday charts are indicating the continuation of a non-directional activity in the near future, Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities observed.
"The short texture of the market is still on the bullish side but a fresh uptrend rally is possible only after the 17,500 breakout level. Above the same, the index could rally up to 17,600-17,750. On the flip side, below 17,500, the index would retest the level of 17,250-17,200 and if the downside continues, it may correct up to 17,050-17,000,” said Athawale.
Deepak Jasani, Head of Retail Research, HDFC Securities pointed out that though the Nifty has gained 1.4% over the week, it has closed in a 15-point band in the last three sessions with intraday recoveries and selloffs seen. "This bull-bear fight may soon end and markets may take a direction for the short term. 17,595 and 17,161 are the key levels on either side," said Jasani.
Disclaimer: The views and recommendations made above are those of individual analysts and not of MintGenie.