Thumbs-up From D-street For RBI's Policy
After opening up on a choppy note on Friday, domestic equity benchmark indices recovered sharply to close the session in the green zone. Investors cheered the outcome of the RBI’s Monetary Policy Committee (MPC) in which it maintained the status quo by leaving the repo rate unchanged.
The 30-share pack Sensex rose 412.23 points or 0.70 per cent to settle at 59,447.18. Its broader peer Nifty advanced 144.80 points or 0.82 per cent to close above 17,784.35.
On the Sensex, ITC was the top gainer from the pack, rising 5 per cent followed by DRL, M&M, Titan, Reliance and Tata Steel also pushed the index higher.
“Markets snapped its 3-day losing streak as investors resumed buying after the RBI in its monetary policy announcement said it would continue with its accommodative stance and stated inflation would cool going ahead. Also aiding the sentiment was an upsurge in other global indices which boosted investors' confidence, although concerns over rising US bond yields, likely rate hikes and sanctions on Russia continue to weigh on the markets,” said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.
The Reserve Bank of India (RBI) on Friday kept borrowing costs unchanged at a record low for the 11th time in a row in a bid to continue supporting economic growth despite inflation edging higher in the aftermath of Russia's war in Ukraine.
RBI's six-member Monetary Policy Committee voted to hold the benchmark repurchase or the repo rate at 4 per cent Governor Shaktikanta Das said.
The Reserve Bank, however, signalled a shift in focus as it ramped up efforts to mop up excess liquidity to pre-crisis levels and raised its inflation forecasts, sending bond yields higher.
The central bank raised inflation projections for FY23 to 5.7 per cent from 4.5 per cent and cut real GDP estimates to 7.2 per cent from 7.8 per cent.
“Nifty bulls regrouped at lower levels as sentiments were primarily buoyed by a dovish RBI. The positive takeaway was that all the sectoral indices ended in green with FMCG, metal gaining around 2 per cent. Nifty midcap and smallcap indices too rose 0.95 per cent and 0.45 per cent respectively. Also helping sentiments were reports that equity mutual funds have attracted a net sum of Rs 28,463 crore in March, making it the 13th consecutive monthly net inflow, despite a volatile stock market environment and amidst continued FPIs (foreign portfolio investors) selling,” said Prashanth Tapse, Vice President (Research), Mehta Equities.
Markets in Asia in Seoul, Shanghai, Hong Kong and Tokyo ended in the green.
Stocks in the U.S. also ended higher in the overnight session.
International oil benchmark Brent crude gained 0.65 per cent to $101.2 per barrel.
“We are of the view that the range-bound texture is likely to continue in the short run. For the bulls, 17550 would be the key support zone, above which the index could hit the level of 17900-18000. On the flip side, if the index closes below the 10-day SMA or 17550, it could hit 17400-17300 levels,” said Athawale.
