Benchmark stock market indices ended the week largely unchanged, despite notable gains in key sectors like auto and FMCG, following the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) decision to hold key interest rates steady for the 11th consecutive time. Market participants had hoped for a rate cut given the decline in growth rate for Q2 FY25, but the central bank maintained its neutral stance, reaffirming its focus on aligning inflation within the target range of 2-6% in the medium term.
Vinod Nair, Head of Research at Geojit Financial Services, noted that while benchmark indices ended the week on a relatively flat note, the broader Indian markets showed signs of optimism. The RBI’s acknowledgment of a slowdown in growth while inflation remained sticky was seen as a positive sign. Furthermore, the RBI's decision to reduce the Cash Reserve Ratio (CRR) and inject ₹1.16 lakh crore into the financial system was intended to stimulate economic growth by increasing liquidity. Nair highlighted that this move, alongside a mixed market outlook, demonstrated the market's cautious yet resilient sentiment, with sector rotations and individual stock performances playing a key role in shaping market sentiment.
Tata Motors emerged as one of the top gainers, rising 3.21%, while Bajaj Auto followed closely with a 2.34% increase. Other notable gainers included Axis Bank, which rose by 1.50%, and BPCL, which saw a 1.28% uptick. On the other hand, some stocks experienced declines. Adani Ports faced a 1.51% drop, CIPLA lost 1.42%, Bharti Airtel dropped 1.09%, HDFC Life fell by 1.08%, and Indusind Bank experienced a 0.99% decline.
VLA Ambala, Co-Founder of Stock Market Today, pointed out that the broader market displayed a positive response even before the RBI’s announcement regarding the CRR cut. Ambala specifically referenced the notable rise in the banking and financial index over the past week, suggesting that the bullish momentum in these sectors was likely to continue throughout the month. He emphasized that the market’s mixed performance was driven by sector rotation, as different sectors experienced varying levels of growth and pullbacks.
The top-performing sectors on the day included Nifty Consumer Durables (up 1.09%), Nifty Auto (up 0.94%), and Nifty Metal (up 1.23%). Nifty Financial Services 25/50 saw a moderate gain of 0.10%, while Nifty FMCG rose by 0.24%, and Nifty Midsmall Healthcare edged up by 0.03%. On the downside, sectors like Nifty Bank (down 0.18%), Nifty IT (down 0.20%), and Nifty Realty (down 0.05%) saw declines, along with Nifty Financial Services (down 0.11%), Nifty Pharma (down 0.13%), Nifty Private Bank (down 0.01%), Nifty Healthcare Index (down 0.06%), and Nifty Oil & Gas (down 0.03%).
From a technical analysis perspective, Ambala pointed out that during the session, the Nifty index formed a long-legged doji candlestick pattern, which indicates market indecision, typically signaling a potential reversal or continuation depending on future price action. The Nifty index remained above the 50-day Exponential Moving Average (EMA), a key support level for short-term traders. Additionally, the Relative Strength Index (RSI) stood at 60, suggesting that the index is neither overbought nor oversold, thus presenting a balanced market scenario for traders. Ambala recommended focusing on accumulating value stocks during such times, particularly mid-cap and small-cap industry leaders who are likely to outperform the broader market. Based on current developments and market trends, he expected the Nifty index to find support around 24630 and 24520 levels, while resistance could be encountered near 24740 and 24850 levels in the upcoming trading session.
Overall, the market's outlook remained mixed, with investors cautiously optimistic about sectors that are expected to benefit from increased liquidity and government policies. However, challenges in sectors like IT and banking, along with concerns about inflation, continue to weigh on sentiment, making it important for traders to monitor developments closely. The market is likely to continue its sector rotation, with different segments responding to the evolving economic environment and policy actions in the coming weeks. The market's technical indicators suggest a potential consolidation phase, which could offer opportunities for value-oriented investors who are willing to hold for the longer term.
