Mumbai (Maharashtra) [India]: The stock market closed in the green, with benchmark indices hitting new all-time highs at the end of closing sessions on Monday.
The BSE Sensex surged by 384.30 points, closing at 84,928.61, while the NSE Nifty gained 148.10 points to settle at 25,939.05. Both indices ended the session driven by strong buying in sectors like auto, oil and gas, and financial services.
Out of the Nifty 50 companies, 34 stocks advanced, while 16 declined. Bajaj Auto, Mahindra & Mahindra (M&M), ONGC, Hero Motocorp, and SBI Life emerged as the top gainers, contributing significantly to the market’s rise.
On the flip side, Eicher Motors, ICICI Bank, Divi’s Labs, Wipro, and IndusInd Bank were the top losers, experiencing profit booking after recent rallies.
The market’s bullish momentum was largely influenced by anticipation surrounding the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting to be held October 7 to 9 and its decision on the repo rate.
As the market gears up for potential rate cuts, India VIX, a volatility index, spiked by more than 9 per cent, also reflecting investor caution.
VLA Ambala, Co-Founder of Stock Market Today, commented on the session’s performance, highlighting the role of macroeconomic factors.
“In today’s session, the India VIX rose more than 9 per cent as the market awaits the MPC policy and REPO rate cut decision. Notably, India’s fast composite PMI recorded a slightly slower growth in September. This is the slowest rate of growth in 2024 for the manufacturing and service sectors,” she said.
“According to me, to remain globally competitive, the RBI needs to match the US Fed rate, which will create a significant difference between India’s lending growth and the long-term FD rates,” she added.
Ambala emphasized the importance of the RBI’s decision in maintaining India’s global competitiveness, particularly in comparison to the US Federal Reserve’s rates. She noted that any repo rate cut by the RBI could inject more liquidity into the economy, potentially spurring a bullish trend in the equity market and benefiting asset classes like real estate.
“If the RBI chooses a REPO rate cut, it will inject more liquidity into the economy, likely fueling a bullish market trend. On the other hand, account holders could enjoy better returns in asset classes such as the equity market and real estate,” she said.
“The banking and NBFC sectors are already responding to the potential rate cut, and we may see a decline of 100-200 bps points in the next 1.5 years. Since the market has been resilient, I believe it will adapt quickly to these economic changes,” Ambala added.
Currently, major indices such as Nifty, Bank Nifty, Financial Services, Mid Cap 100, Mid Cap 150, Next 50, FMCG, Consumption, Metal, Infrastructure, and Auto are trading at all-time highs.
Sectors like NBFCs, Realty, Infrastructure, and PSU stocks are expected to remain in focus as potential rate cuts could open up significant opportunities for mid-term investors.
The technical indicators show that the broader trend remains bullish, with the Relative Strength Index (RSI) for Nifty standing at 74 on the daily, 75 on the weekly, and 83 on the monthly timeframe.
However, Ambala advised investors to approach the market cautiously.
“The Nifty index can expect support levels at 25,870 and 25,680 with resistance at 26,050 and 26,130 in the next market session,” she stated.