Sensex, Nifty Rise On Global Cues; All Eyes On Credit Policy

Mumbai: Markets benchmark indices on Monday ended at fresh 52-week closing highs led by rate-sensitive shares ahead of the RBI monetary policy review on Tuesday, while better-than-expected US jobs data led to a rally in export-oriented stocks such as IT and pharma.

Rising for the third straight day, the 30-share BSE Sensex rose 104.22 points or 0.37 percent to 28,182.57 points. NSE Nifty added 28.20 points or 0.32 percent to 8,711.35 points. NSE Nifty retook the 8,700-mark on optimistic buying by participants ahead of RBI policy review amid increased foreign capital inflows.

“Fresh buying on the back of positive Asian markets, healthy US’s jobs data and higher crude oil prices buoyed the equity markets. However, the dabate over the GST bill in the Lok Sabha might flare some volatility,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, said.

Reserve Bank of India’s (RBI) Governor Raghuram Rajan, whose 3-year term will expire on September 4, is widely expected to hold the key interest rate as retail inflation continues to be above the comfort zone.

Reserve Bank of India’s (RBI) Governor Raghuram Rajan, whose 3-year term will expire on September 4, is widely expected to hold the key interest rate as retail inflation continues to be above the comfort zone.

Positive global markets, along with hopes of Parliamentary approval for a major economic legislation and higher crude oil prices, buoyed the Indian equity markets during the late-afternoon trade session. Sector-wise, healthy buying was witnessed in automobile, oil and gas, and consumer durables stocks.

Dhruv Desai, Director and Chief Operating Officer of Tradebulls, said: “Gains were capped due to caution ahead of the Reserve Bank of India’s monetary policy review. Aviation stocks faced resistance at higher levels and traded with sideways sentiments due to the recovery in crude oil prices. IT and auto stocks held on to their initial gains, while banking and pharma stocks traded with mixed sentiments due to profit booking at higher levels.”

Firm Asian cues tracking record closing in the US after strong employment numbers released on Friday bolstered sentiment. Among overseas markets, European and Asian markets rose with sentiment underpinned by a stronger-than-expected US jobs report released on Friday. Japanese stocks edged higher as the yen weakened against the dollar amid the dollar’s broad strength driven up upbeat job data.

The Nikkei 225 index closed 2.44 percent higher. Chinese shares shrugged off weak trade data. In mainland China, the Shanghai Composite was currently up 0.6 percent. In Hong Kong, the Hang Seng index was up 1.2 percent.

Back home, the Centre in consultation with RBI has notified consumer price inflation target of 4 percent with upper tolerance level of 6 percent and lower tolerance level of 2 percent to be achieved by the Reserve Bank.

Technical analysts see short term correction if Nifty breaks below 8720. Important support is at 8625-8610 and resistance is visible around 8700-8750. The next course of market will depend on FII and DII trading activity, quarterly results of the major companies and price movement of crude oil in international market. RBI credit policy will impact the market sentiment. Market observers expect interest rate to stay unchanged which is now at five year low of 6.5 percent.

Rate-sensitive sectors like banks, realty and auto ended positive. The Governor may prefer that RBI assesses the full impact of monsoon rains before taking a view on the interest rate. Export oriental sectors like IT and pharma gained after upbeat US job data for July 2016. The US is the biggest outsourcing market for the Indian firms.

Source: IANS