Domestic market benchmarks the Sensex and the Nifty ended with healthy gains on September 30, snapping their seven-day losing streak, after the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) did not throw any negative surprise and raised rates on expected lines by 50 bps.
Sensex opened 170 points lower at 56,240.15 but jumped as much as 1,313 points to the intraday high of 57,722.63. The index closed 1,017 points, or 1.80%, higher at 57,426.92. Nifty50 ended the day at 17,094.35, up 276 points or 1.64%.
The gains were broad-based as the BSE Midcap and Smallcap indices ended 1.39% and 1.45% higher, respectively.
The overall market capitalisation of BSE-listed firms jumped to nearly ₹271.9 lakh crore from ₹268 lakh crore on September 29, making investors richer by ₹3.9 lakh crore in a single day.
On expected lines, the RBI raised the repo rate by 50 basis points to 5.9% with immediate effect. Apart from the expected rate hikes, commentary on growth and inflation seems to have boosted market sentiment.
"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% indicates the resilience of the Indian economy," said Vinod Nair, Head of Research at Geojit Financial Services.
RBI Governor Shaktikanta Das expressed his faith in the resilience of the Indian economy. Even though the real GDP growth in Q1FY23 (at 13.5% year-on-year) turned was lower than the RBI estimates, Das said economic activity in India remains stable despite the challenging global environment.
RBI projected real GDP growth for FY23 at 7%. RBI expects retail inflation to come down to 5% in the first quarter of the next financial year (FY24). In the current financial year (FY23), retail inflation may remain above the RBI tolerance rate of 6.7%.
"The inflation projection is retained at 6.7% in FY23, with Q2 at 7.1%, Q3 at 6.5% and Q4 at 5.8% with risks evenly balanced. CPI inflation is projected to further reduce to 5% in Q1FY24," said Das.
The 30-share pack Sensex ended with 25 gainers. Bharti Airtel, IndusInd Bank, Bajaj Finance, Titan and HDFC Bank ended as the top gainers while Asian Paints, Dr Reddy's Labs, ITC, Tech Mahindra and Hindustan Unilever ended as the laggards in the Sensex index.
Among the sectoral indices, Nifty Bank jumped 2.61% with all stocks in the green. Stocks such as Federal Bank, Punjab National Bank and IDFC First Bank jumped almost 5% each.
European markets were in the green after government bond yields eased.
Crude oil prices traded with a mild uptick but Brent Crude traded below the $95 a barrel mark. The rupee jumped 51 paise to close at 81.35 per dollar.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities, observed that after a sharp selloff, the Nifty took support near 16,800 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 16,900 would act as a support. Above the same, the reversal wave is likely to continue till 17,250. Further upside may also continue which could lift the index to 17,400. On the flip side, below 16,900, uptrend would be vulnerable and on a further decline, the index could slip to 16,800-16,700,” said Athawale.
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