Taking Stock | Sensex, Nifty end the week in green after RBI's 50bps rate hike

The US non-farm payroll data for July due this evening could impact the trend of the US markets and in turn other markets.

August 05, 2022 / 04:56 PM IST

The Indian indices ended marginally positive on August 5 after the Reserve Bank of India (RBI) raised the key policy rate by 50 bps against the street’s expectations of a 30-40 bps increase.

At close, the Sensex was up 89.13 points or 0.15% at 58,387.93, and the Nifty was up 15.5 points or 0.09% at 17,397.5.

The markets witnessed a positive weekly closing for the third week in succession.

Tracking positive global cues from the US and Asian markets, the Indian stock market opened on a positive note with gains of ~0.2 percent. The market initially shrugged off the 50 bps rate hike and made further gains, but in the afternoon session, it lost steam leading to rangebound trading.

“Despite the rate hike being on the higher side of the expectations, the market welcomed the RBI's move of 50 basis hike with rising bond yields”, said Vinod Nair, Head of Research, Geojit Financial Services.

Even though metals prices are softening, RBI decided to keep FY23 inflation targets unchanged at 6.7 percent, which is above the tolerance level.

“However, given that Q3 and Q4 inflation is anticipated to be between 4.0 percent and 4.1 percent, the market is hopeful for the future”, Nair added.

Today, the market sentiments were also aided by the decline in crude prices below $90 per barrel on a reduction in demand due to fears of a slowdown, which will likely have a cooling effect on global inflation.

IndexPricesChangeChange%
Sensex59,462.78130.18 +0.22%
Nifty 5017,698.1539.15 +0.22%
Nifty Bank39,042.30162.45 +0.42%
Nifty 50 17,698.15 39.15 (0.22%)
Fri, Aug 12, 2022
Biggest GainerPricesChangeChange%
ONGC139.206.40 +4.82%
Biggest LoserPricesChangeChange%
Divis Labs3,726.20-221.85 -5.62%
Best SectorPricesChangeChange%
Nifty Energy27163.95502.20 +1.88%
Worst SectorPricesChangeChange%
Nifty IT29885.90-347.80 -1.15%

UltraTech Cement, Shree Cements, ICICI Bank, UPL, and Bharti Airtel were the top gainers on the Nifty, with each gaining between 1.35 to 2.84 percent. On the other hand, Hindalco, Britannia, M&M, Eicher Motors, and Reliance Industries comprised the list of top losers on the Nifty as each lost between 1.47 to 2.58 percent today.

Among sectors, Nifty IT was the top gainer with a gain of 0.64 percent. The rate-sensitive Nifty Auto was the top loser as it declined by more than one percent today. The Nifty Metal index lost 0.44 percent while the other rate-sensitive sector, Nifty Realty managed to gain 0.31 percent.

Stocks & Sectors

On the BSE, the Telecom index gained the most - 1.34 percent while BSE IT was up 0.72 percent, and the banking index gained ~0.45 percent. BSE power and utilities indexes were down more than 1.5 percent each while the auto index lost close to 1.1 percent today.

The broader indices had a mixed day today but most of them closed marginally in the positive. However, BSE Midcap ended the day higher by 0.09 percent and BSE Smallcap was up 0.23 percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, declined 1.77 percent from 19.25 to 18.91.

A long build-up was seen in Manappuram, NMDC, and Interglobe Aviation while a short build-up was formed in Balkrishna Industries, GAIL, and Balrampur Chini.

Among specific stocks, a volume spike of more than 250 percent was witnessed in Manappuram, ONGC, and Balkrishna Industries.

More than 100 stocks touched their 52-week highs on the BSE including Adani Enterprises, Adani Transmission, Cholamandalam Finance, and Deepak Fertilizers.

Outlook for August 8

Deepak Jasani, Head of Retail Research, HDFC Securities

Asian stock markets rose Friday ahead of an update on the health of the US jobs market while the Federal Reserve weighs whether more rate hikes are needed to cool surging inflation. Stocks in Europe struggled for direction but were still set for a weekly gain as investors brace for the monthly US jobs report that's likely to enliven the recession debate.

The US non-farm payroll data for July due this evening could impact the trend of the US markets and in turn other markets. Though the Nifty has gained 1.39% over the week, it has closed in a 15-point band in the last three sessions with intra-day recoveries and selloffs. This bull-bear fight may soon end and markets may take a direction for the short term. 17,595 and 17,161 are the key levels on either side.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty posted a positive weekly close for the third consecutive week. However, the upside momentum has slowed down this week. For the last couple of sessions, the Nifty is hovering around the 78.6% retracement of the Apr – June decline, which is near 17,500. Over there, the index formed a bearish outside bar & a Hanging Man candle on August 4 whereas, on August 5, it formed an Inside bar on the daily chart.

This shows that the index is witnessing a brief distribution & is preparing for a short-term consolidation. 17,000-17,500 is expected to be the short-term consolidation range within which the index is set to test the lower end of the range i.e. 17,000 in the coming sessions.

Ajit Mishra, VP - Research, Religare Broking Ltd

Markets remained range bound for yet another session and ended almost unchanged amid mixed cues. After the flattish start, the benchmark tried to regain some strength however profit-taking at the higher levels capped the upside as the session progressed. It remained volatile till the end, after the outcome of MPC’s meet which was in line with market expectations. Finally, the Nifty ended the choppy day on a flat note. On the sector front, a mixed trend continued wherein IT, FMCG and financials were the gainers while auto, energy, and media settled in the red.

With no major event lined up ahead, the focus would be on earnings and global cues for direction. On the index front, we’re currently seeing time-wise correction as it’s somehow holding around the upper band of the consolidation range. A decisive break above 17,400 would help resume the trend ahead else consolidation may continue. Since we’re seeing rotational buying across sectors, focus more on stock selection and overnight risk management.

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Gaurav Sharma
first published: Aug 5, 2022 04:56 pm
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