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The Indian stock market experienced a positive day on October 5, 2023, with the Sensex and Nifty closing in the green despite the Reserve Bank of India (RBI) maintaining the repo rate at 6.5 percent. While the indices initially surged to new highs, they later pulled back but remained comfortably in positive territory. The RBI's decision to keep the rates unchanged and shift its policy stance from 'withdrawal of accommodation' to 'neutral' was viewed positively by market participants.
Himani Shah, Co-Fund manager at Alchemy Capital Management, praised the RBI's move, calling it a 'prudent and well-considered' decision. Shah emphasized that the shift to a 'neutral' stance promotes sustainable liquidity conditions that foster economic growth, setting the stage for potential rate cuts in the future. The broader market outperformed the benchmarks, with the BSE Midcap and Smallcap indices registering gains of nearly 1.5 percent each.
The market's attention is now focused on the upcoming release of US CPI data on October 10 and the start of the third-quarter earnings season. Domestically, the Q2 FY25 earnings season will kick off with TCS reporting results on October 10. Sectorally, all 12 indices except FMCG were in the green. Banking and IT stocks were the key drivers of the Nifty's upward momentum, while FMCG stocks lagged due to losses in ITC, Nestle, and HUL.
The Nifty Bank index gained 0.5 percent after climbing over 1 percent earlier in the day, surpassing 51,600 following the MPC outcome. Meanwhile, the Nifty IT extended its winning streak to four sessions, rising 0.7 percent ahead of the Q2 FY25 earnings season. The index was propelled by gains in Infosys, HCLTech, and Wipro. Nifty Realty emerged as the top gainer, climbing over 2 percent, buoyed by stable rates that ensure consistent EMIs, boosting confidence among homebuyers.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, highlighted that the change in policy stance, coupled with the prospect of rate cuts, will provide significant support to the low- and mid-value housing segments, which have seen decreased participation in recent years. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, observed that the 'Sell India, Buy China' strategy recently adopted by foreign institutional investors (FIIs) appears to be nearing its end, as indicated by declining FII sell numbers and profit-booking in Chinese stocks, particularly those listed in Hong Kong.
Vijayakumar emphasized that the ongoing tug-of-war between FIIs and domestic institutional investors (DIIs) in the current bull rally has consistently resulted in victories for DIIs. FIIs are selling due to valuation concerns, while DIIs, with their deep pockets, continue to buy. This trend is expected to persist. Vijayakumar also anticipated that the BJP's victory in Haryana will serve as a morale booster for the party and a confidence booster for the markets.
From a technical perspective, Sameet Chavan, Head of Technical and Derivative Research at Angel One, noted that the Nifty 50 might encounter resistance in the 25,100-25,300 range. Chavan stated that a decisive move beyond this range could reignite market enthusiasm. The article also provided a list of the top gainers and losers for both the Nifty and Sensex indices. Finally, the article highlighted the positive share price movements of Premier Energies and Ajmera Realty and Infra India, driven by specific company news and developments.
Source: Mid-day Mood | Sensex, Nifty pull back from day's high; bank, IT lead gains