Monday 25 / November / 2024
Mumbai: The Indian stock market's benchmark Sensex has rallied over 4,200 points in the last one month. The index had gained for eight consecutive sessions prior to Friday's decline. This was the longest winning streak in almost two years. Will the bull run continue on Dalal Street in the coming week? The markets started the week on a positive note and soared past the psychologically important 60,000 points mark for the first time since April 5. The bullish trend continued till Thursday. However, some profit booking on Friday, the last trading day of the week dragged the benchmark Sensex below the 60,000 points mark again.
On Friday, the 30 stock S&P BSE Sensex slumped 651.85 points or 1.08 per cent to 59,646.15 points.
The broader Nifty 50 of the National Stock Exchange slumped 198.05 points or 1.10 per cent to close at 17,758.45 points on Friday.
"Interest rate sensitives such as banking, auto & realty stocks witnessed heavy profit-taking and halted benchmark indices' 7-day winning streak," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd.
Negative cues from the global markets dragged the Indian equities markets' key indices down by over one per cent on Friday. Investors pressed the sell button after the US Federal Open Market Committee (FOMC) minutes indicated that the Federal Reserve may go for rate hikes in its next meeting, which prompted local investors to prune their holdings after the recent run-up.
Technically, the Nifty witnessed profit booking near 18000 level, while on daily charts, the index has formed a long bearish candle and also broke the important support level of 17850 which is broadly negative, said Athawale.
In addition, it has also formed Hammer candlestick formation indicating further weakness in the near future. Below 17900, the correction formation is likely to continue and could retest the level of 17600-17500. On the flip side, 17900-17950 would act as an immediate hurdle for the bulls. A fresh uptrend is possible only if the index clears the resistance of 17950, which could then take it further to 18050-18150 levels, he said.
On the last trading day of the week, there was heavy selling pressure in banking and financial stocks. IndusInd Bank slumped 3.82 per cent to Rs 1062.85. Bajaj Finserv dipped 3.08 per cent to Rs 16292.85. Bajaj Finance slumped 2.53 per cent to Rs 7301.20. State Bank of India dipped 2.25 per cent to Rs 520.40.
Commenting on the weekly trend, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, "Equity market started the week on a positive note, but correction on Friday erased most of the weekly gains."
BSE Midcap and BSE Small cap index outperformed the BSE-30 and Nifty-50 indexes. Most sectoral indices saw marginal gains during the week.
"Recent market rally possibly reflects increasing expectation about the peaking of inflation, commodity price correction and decent earnings visibility. India's July 2022 CPI inflation saw moderation. Further, some decline is being witnessed in oil prices. Q1FY23 results were broadly on expected lines. FPIs flows have started to turn favorable," Chouhan said.
India's headline retail inflation fell to 6.71 per cent in July, the lowest level in five months, helped by an easing in food and oil prices, as per the National Statistical Office (NSO) data. The Consumer Price Index (CPI) based retail inflation stood at 7.01 per cent in June.
Although the retail inflation has declined significantly in July when compared with the previous month, it remained higher than the Reserve Bank of India (RBI) upper tolerance limit of 6 per cent.
Though inflation has moderated and plateaued since its recent peak of April 2022, it remains unacceptably and uncomfortably high, RBI Governor Shaktikanta Das said in his intervention during the Monetary Policy Committee Meeting held 3-5 August, as per the minutes of the meeting released on Friday.
"Sustained high inflation, unless addressed effectively, could result in unanchoring of inflation expectations and their second order effects. This necessitates appropriate monetary policy response to prevent upward drift in inflation from the target rate. I am of the view that at this juncture a 50 bps increase in the repo rate is necessary and, therefore, vote accordingly. I also vote for remaining focused on withdrawal of accommodation," Das said while making a pitch for the hike in policy repo rate.
During the meeting the MPC decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points to 5.40 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 5.15 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 per cent.
