Indian stock markets recovered sharply after the Sensex ended over 1,000 points at 57,426 after the Reserve Bank of India announced its monetary policy decision. Analysts said the market is taking comfort from expectations that the RBI may be nearing the end of the rate hike cycle in India. The RBI today raised its benchmark repo rate by 50 basis points, the fourth straight increase, as policymakers ramped up their fight to contain stubbornly high inflation and further tightening is on the cards, analysts said. The RBI has now raised a total of 190 basis points since its first unscheduled mid-meeting hike in May.
The NSE Nifty 50 index closed 1.6% higher at 17,094, ending 7 days lower. Nifty and Sensex rose over 8% in the quarter, capping their best quarter in a year. Today, the RBI slightly cut its GDP forecast for the year while maintaining the inflation outlook.
“The Indian equity market witnessed a sharp jump after seven days of decline. Short-covering in the market strengthened on the back of a fall in the dollar index and no negative surprises by the RBI. Technically, Nifty was sitting near 16800-16635 demand zone and derivatives data was highly oversold as FIIs started the October series with 87% short positions in index futures. Hence, we saw a powerful short-covering rally,” said Santosh Meena, Head of Research, Swastika Investmart.
European markets were also trading higher today as the dollar index hit a one-week low. “Nifty witnessed a bullish engulfing candlestick pattern on the daily chart with support from 100-DMA, which is a very bullish sign for the bulls. On the upside, 17190 is an immediate hurdle, and 17325-17425 is the next important supply zone. .
“Bank Nifty also witnessed a sharp bounce off the psychological support level of 37500. Above this level, we can expect a move towards the level of 39700 which may coincide with the 20-DMA. Unsurprisingly, the first of the new series The day’s low or high acts as a strong support and resistance throughout the range. Hence, today’s low of 17647 has become a sacred reference point for the bulls. In terms of the sector, the current bullish leaders, banking and Financials, outperformed,” he said.
Banking stocks have taken the lead in today’s gain with the Bank Nifty index up 2.6%.
,reserve Bank of India hiked the policy rate by 50 bps along expected lines and maintained its stance as “return to housing”, saying the real policy rate (adjusted for inflation) is still lagging behind pre-pandemic levels. The GDP growth forecast for FY23 has been revised marginally from 7.2% to 7%, said Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life, while the inflation forecast has been broadly maintained. Insurance.
“Therefore, we feel that the RBI may be nearing the end of the rate hike cycle in India and future rate hikes will have more to do with supporting the Indian currency and to some extent with the inflation trajectory in both equity and bond markets. has taken it positively and it has gained momentum after the announcement of the policy.”
Market heavyweight Reliance Industries also gained with a gain of 3%.
“RBI’s comments have been a well-balanced one – while global risks are widely discussed, RBI appears confident on the pace of growth in the Indian economy in the coming months. Modest fall in GDP growth target for FY23 up to 7% from 7.2% earlier, and leaving inflation forecasts largely unchanged is on expected lines, while today’s RBI communication suggests future policy to rely on data and rule out another round of rate hikes Overall, the MPC has avoided giving rise to any major surprises. “Broadly favorable response from most sectors of financial markets,” said Siddharth Sanyal, chief economist and head of research, Bandhan Bank.
Religare Broking said in a note that RBI’s confidence in the Indian economy highlights today’s monetary policy.
“The RBI raising the repo rate by 50 bps was in line with market expectations, but it is the RBI’s confidence in the economy that has been the highlight of the monetary policy. The governor is confident that the GDP growth for FY23 will remain at 7% His statement, “Delayed recovery in kharif sowing, comfortable level of reservoirs, improving capacity utilization, bank credit expansion and continued thrust of the government on capital expenditure.”
“Finally, in response to a question at Deputy Governor Mr. Michael Patra’s press conference, he said, “Soft-landing is for developed economies, for India it is a take-off” explains everything. We believe That the RBI and the government are handling the economy is far better than their major global counterparts,” said Siddharth Bhamre, Head of Research, Religare Broking Ltd.
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