Equity benchmarks the Sensex and the Nifty ended with healthy gains on February 8 as the Reserve Bank of India (RBI) did not throw any negative surprise to the market by lifting policy repo rates on expected lines.
Positive global cues, after less hawkish comments from Fed Chair Jerome Powell, also underpinned sentiment.
RBI governor Shaktikanta Das announced a 25 bps hike in the policy repo rate to 6.50 percent. The Monetary Policy Committee (MPC) of the central bank decided by a majority of four out of six members to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target range and there is no harm to the economic growth of the country.
Back home, while the 25 bps hike was on expected lines, the Street was eager to get hints on a pause in the coming policy meet.
But the RBI refrained from giving any clear signal on the trajectory of rate hikes. This, however, did not upset the market which seems to be taking comfort from the optimistic projection of growth and inflation by the central bank for the next financial year.
RBI projected real GDP growth for 2023-24 at 6.4 percent while CPI inflation is projected at 5.3 percent for the same period.
Sensex remained in the green throughout the session and ended 378 points, or 0.63 percent, higher at 60,663.79. Nifty50 closed the day at 17,871.70, up 150 points, or 0.85 percent.
Mid and smallcaps also clocked healthy gains. The BSE Midcap index rose one percent while the Smallcap index ended 0.76 percent higher.
The overall market capitalisation of BSE-listed firms rose to ₹268.6 lakh crore from ₹266 lakh crore in the previous session, making investors richer by ₹2.6 lakh crore in a single session.
Crude oil prices rose for the third consecutive day amid easing concerns over Fed rate hikes. Brent crude traded over a percent higher near the $85 a barrel mark.
The rupee jumped 20 paise to close at 82.49 per dollar amid gains in domestic equities and weakness in the dollar index.
Top Nifty gainers: Shares of Adani Enterprises (up 23.13 percent), Adani Ports (up 9.01 percent) and HDFC Life Insurance Company (up 5.25 percent) ended as the top gainers in the Nifty index.
Top Nifty losers: Shares of Larsen & Toubro (down 1.48 percent), Eicher Motors (down 1.43 percent) and Bharti Airtel (down 1.39 percent) ended as the top losers in the Nifty pack.
All sectoral indices ended in green. Nifty Metal jumped 3.78 percent, ending as the top sectoral gainer. Nifty IT, Pharma and Healthcare indices ended over a percent higher each.
Experts' views on markets
Vinod Nair, Head of Research at Geojit Financial Services observed that bulls took charge of the markets as the RBI’s MPC meeting delivered a smaller rate hike in line with market expectations.
Nair underscored that RBI has taken a more optimistic view on domestic growth by increasing the GDP forecast while cautiously keeping CPI inflation at 5.3 percent for FY24. Global markets traded with hope as investors digested Powell’s speech, which stated that disinflation had begun but pointed towards the possibility of further rate hikes in response to a stronger job market.
Ajit Mishra, VP - Technical Research at Religare Broking said with all the major events behind us, the performance of the global indices combined with earnings will dictate the trend ahead.
"This rebound has certainly eased pressure but a decisive close above 17,900 in Nifty is critical for any sustained recovery. Meanwhile, we reiterate our preference for IT, FMCG and select banking and auto pack and suggest focusing on identifying opportunities from these sectors," said Mishra.
Technical view on markets
As per Shrikant Chouhan, Head of Equity Research (Retail) of Kotak Securities, the Nifty formed a bullish candle on daily charts which is broadly positive. However, 17,950 could be the next profit booking zone for the bulls.
"As long as the index is trading above 17,750, the uptrend wave will continue. Above the same, the market could move up to 18,150. On the flip side, below 17,750, the uptrend would be vulnerable," said Chouhan.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.