Nifty 50: Gains Erode as RBI Holds Steady—Can the market regain momentum, or are more surprises in store?

At the close, the Nifty 50 was at 24,981.95 down by 0.12%

October 9, 2024. Today was a rollercoaster for the NSE Nifty 50, which opened with optimism but closed down by 0.12%, settling at 24,981.95. After starting strong, it hit a day high of 25,000, but the gains evaporated amid final-hour selling. What caused this late downturn?

The Reserve Bank of India (RBI) has kept its repo rate unchanged at 6.5% for the tenth consecutive time. But the big news? The RBI shifted its stance from ‘withdrawal of accommodation’ to ‘neutral.’ This indicates a potential rate-cut cycle on the horizon. Yet, despite this hopeful sign, the market reacted negatively, unable to sustain its intraday gains.

The resistance level of 25,200 proved formidable in today’s trade. The Nifty had shown promise, compounding gains for most of the day, only to witness a steep decline in select heavyweights that dragged it down to the closing figure.

As traders weighed the implications of the RBI’s decision, a small negative candle formed on the daily chart, suggesting a rejection of bullish momentum at key hurdles. Could this indicate further softness in the market? Although the short-term trend remains positive, the lack of strength in the recent bounce might lead to further weakness near recent lows before another possible upswing.

RBI’s Neutral Shift: What Does It Mean for You?

The RBI’s decision to keep the key interest rate unchanged was anticipated, but the shift to a ‘neutral’ stance hints at a low-rate regime ahead. This change, combined with lower inflation and surplus system liquidity, bodes well for the real estate sector. As homebuyers gain purchasing power, the stage is set for increased demand, especially with the festive season approaching.

However, while the shift to neutral is encouraging, it doesn’t guarantee an immediate rate cut. The RBI is now more flexible in responding to economic developments, which could influence future policy changes. Yet, with ongoing geopolitical tensions and rising crude prices, the path forward is fraught with risks.

Volatility has dropped below 15, with the India VIX fear gauge declining by 3.44% to 14.09, providing some comfort for bulls. But will this be enough to keep the market afloat?

Investors showed caution today as upward revisions in Q3FY25 inflation stirred concerns about sticky inflation. Profit booking ensued as input price volatility affected FMCG stocks. While the change in stance is favorable and was expected, the lack of immediate rate-cut indications kept investors on their toes.

As the market navigates this complex landscape, opportunities abound on a stock-to-stock basis. Will investors seize the moment, or is caution the name of the game? The coming days will reveal the true sentiment behind today’s market movements.

Bank Nifty: Down by 0.03%

The Bank Nifty opened positively but fell flat, ultimately down by 0.03% and closing at 51,007.00. Meanwhile, the BSE Sensex mirrored this trend, dropping 0.21% to settle at a low of 81,467.10.

In the sectorial front, the Realty sector has seen a robust surge, gaining an impressive 2.15% overall. This rise is largely attributed to standout performances from key players such as Oberoi Realty Ltd., which soared by 4.35%, and The Phoenix Mills Ltd., which recorded a 3.85% increase.

Conversely, the Fast-Moving Consumer Goods (FMCG) sector is facing headwinds, marking a decline of 1.57%. This downturn is notably influenced by ITC Ltd., which experienced a drop of -3.04%, alongside Nestle India Ltd., which saw a loss of -2.44%.

Foreign Institutional Investors (FIIs) had a challenging day. Their buy value stood at Rs. 11,726.26 Cr, while their sale value soared to Rs. 16,288.97 Cr. This resulted in a net outflow of Rs. 4,562.71 Cr.

Domestic Institutional Investors (DIIs) painted a brighter picture. With a buy value of Rs. 14,841.81 Cr and a sale value of Rs. 11,333.20 Cr, DIIs recorded a net inflow of Rs. 3,508.61 Cr.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included State Bank of India with a 1.84% increase, Punjab National Bank with a 1.48% increase, Axis Bank with a 1.47% increase, ICICI Bank with a 0.86% increase, and Kotak Bank with a 0.08% increase.

On the other hand, the biggest losers in the sector included AU Bank with a 2.78% decline, IDFC First Bank with a 1.23% decline, Federal Bank with a 1.23% decline, IndusInd Bank with a 1.00% decline, HDFC Bank with a 0.79% decline. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 9th October, 2024

Rupee Edges Higher as RBI’s Monetary Policy Announcement Looms: What’s Next?

In early Wednesday trade, the rupee inched up by 5 paise, settling at 83.92 against the US dollar. But with the Reserve Bank of India’s (RBI) monetary policy announcement looming, all eyes are on what’s next. Will the RBI shift gears?

While major central banks are leaning towards rate cuts—the US Fed recently lowered rates by 50 basis points—the RBI has stuck to its accommodative stance. The big question now is: will the RBI continue its supportive policies, or take a more neutral approach?

As the rupee opened at 83.92, it registered a slight rise from its previous close of 83.97 on Tuesday. Meanwhile, the dollar index saw a marginal increase, up 0.03% to 102.58 points, reflecting the greenback’s strength.

On the commodities front, Brent crude traded higher by 0.40%, reaching USD 77.49 per barrel.

With over USD 700 billion in foreign reserves, the RBI remains strong, but the rupee seems caught in a tight range, facing global pressures and a strong US economy. How much longer will the rupee hold its ground?

Stocks Highlights

Cipla Ltd. saw its share price climb by 2.58%, rising from Rs 1,640.70 to Rs 1,683.00. But here’s a surprising stat—in the last 19 years, only 0.86% of trading sessions have recorded intraday gains above 5%. Could this signal more potential?

A closer look reveals Cipla’s ROE for the year ending March 2024 outperformed its 5-year average, clocking in at 15.43% compared to 11.98%. Not to mention, annual revenue growth of 14.17% beat its 3-year CAGR of 10.82%.

The Bulls are back: A 20-day moving average crossover appeared yesterday, and in the past, this signal has delivered an average price gain of 2.54% within 7 days.

ITC Ltd.’s stock slid by -3.04%, with the last traded price standing at Rs 492.50. Interestingly, only 0.78% of trading sessions over the last 19 years have seen declines greater than 5%. Is this just a bump in the road?

Despite today’s drop, ITC has crushed long-term benchmarks. Over the last 3 years, the stock delivered a massive return of 119.23%, compared to Nifty 100’s 43.63%. Even when compared to Nifty FMCG, ITC outshined with a return of 119.23% versus 58.34%.

Another positive note: ITC kept expenses under control, spending less than 1% on interest and 8.65% on employee costs for the year ending March 2024.

Advance Decline Ratio

Today, the advance-decline ratio was 1.98, and the market breadth was positive. The volatility index India Vix decreased by 3.44 to settle at 14.09 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 1831
Decliners – 925
52Wk High – 69
52Wk Low – 18
High Band Hitters – 191
Low Band Hitters – 51
200d SMA – 23183
50d SMA – 25048
20d SMA – 25500

Top Gainers and Losers Stocks

The top gainers were Cipla (+2.58%), Trent (+2.34%), Tata Motors (+2.09%), SBIN (+1.84%), and Tech Mahindra (+1.77%).

The top losers were ITC (-3.04%), Nestle India (-2.44%), ONGC (-1.69%), Reliance (-1.67%), and Hindustan Unilever (-1.45%).

Top Gainers and Losers Sectors

The top gainers sector were Realty (+2.15%), Pharma (+2.04%), Media (+0.83%), Auto (+0.82%), and Consumer Durables (+0.61%).

The top losers sector were FMCG (-1.57%), and Oil & Gas (-0.67%).

SECTORS – NOTABLE ACTION
REALTY +2.15%
PHARMA +2.04%
MEDIA +0.83%
FMCG -1.57%
OIL & GAS -0.67%

Stocks Ban List

(SEBI) F&O ban list (GNFC close at +647.45), (SAIL close at -130.33), (GRANULES close at +573.65), (PNB close at +104.10), (IDFCFIRSTB close at -72.39), (RBLBANK close at +196.08), (MANAPPURAM close at +191.10), (HINDCOPPER close at -313.50), (BANDHANBNK close at +188.85), and (BSOFT close at +591.25) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

CHAMBLFERT, NMDC, TATACHEM, BALRAMCHIN, IEX, NATIONALUM, GMRINFRA, CANBK, LICHSGFIN, and PEL stocks has the possibilities of entrance in the ban list.

BANDHANBNK, and BSOFT stock has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 24700 to 25300 is the Nifty 50 trading range.

Read Previous -Daily Insights- here
Are Indian markets turning around ahead of the RBI decision? Will the Nifty 50 defy expectations and rise?
Could Wednesday’s surprising turn signal a new era for the Nifty? Will Dalal Street’s thrilling ascent continue?

This article is only for educational purposes and is not an investment advice.