Bulls retained control over the Indian stock market in Tuesday’s trade on October 6, as the frontline indices closed with solid gains and extended their recovery run for the second day in a row. The rally was largely supported by banks, while supportive global cues also aided sentiment ahead of a crucial RBI policy decision.
Stocks opened the session higher, followed by a strong rally on Wall Street, and momentum was sustained through the close, supporting a partial recovery from recent losses.
Market attention now shifted to the RBI’s policy outcome tomorrow, with the Street largely anticipating a 25-basis-point repo rate hike, which would be the RBI’s first increase since February 2023.
Indian stock market today
The Nifty 50 wrapped up the trade with a 1% gain to settle at 22,776, while the Sensex also posted a similar 1% jump to settle at 73,067. The broader markets, however, posted even bigger gains, with the Nifty Smallcap 100 index surging 1.56% and the Nifty Midcap 100 index rallying 1.08%.
Sectoral performance was largely tilted towards gainers, with chemicals topping the charts, followed by pharma, oil and gas, private banks and FMCG. On the flip side, IT was the biggest laggard, while realty, PSU banks and cement also closed the trade lower.
Elsewhere, Brent crude held losses from Monday, when it fell almost 2% to about $100.30 a barrel. The decline followed rising Persian Gulf exports and a Saudi Arabian price cut that pointed to a loosening market.
Stock markets have largely looked through last month’s Federal Reserve interest-rate hike, elevated energy costs and renewed inflation concerns that sent global bond yields soaring. Instead, investors have focused on September-quarter earnings.
In the bond market, US Treasury yields remained near their multi-decade highs. The 10-year US Treasury yield climbed to around 5.30%, from 5.28% on Friday, after it briefly crossed the 5.35% mark, its highest level since 2002, driven by inflation concerns despite easing bets of a US rate hike later this month.
The Monetary Policy Committee (MPC) may raise the key repo rate by 25 basis points to 5.50% on October 7, according to nine of 10 economists surveyed by Mint, with only one respondent expecting a pause.
Nikkei, Kospi outlook: Can bulls sustain momentum above key levels?
Among other key Asian markets, Japan’s Nikkei 225 rose 1.1% to 70,683.98. The benchmark has returned above the 70,000 mark this week for the first time since early July.
South Korea’s Kospi lost 0.9% to 6,941.39. Technology-related stocks in Japan and South Korea were volatile. Japanese chip-testing equipment manufacturer Advantest gained 3.9%, while OpenAI investor SoftBank Group fell 3.1% after its CEO, Masayoshi Son, warned of potential dangers related to the technology.
South Korea’s Samsung Electronics dropped 1.5%, while memory chipmaker SK Hynix slipped 3.7%. Hong Kong’s Hang Seng climbed 0.8% to 24,234. Australia’s S&P/ASX 200 rose 0.6% to 8,735.70. Taiwan’s Taiex edged up 0.2%.
Vipin Kumar, AVP-Research at Globe Capital Market, said the Nikkei is gradually moving towards its all-time high of 72,831 spot levels. Any dips towards the 69,500–69,000 spot levels should be considered a fresh buying opportunity.
On the Kospi, Vipin Kumar said the index is still consolidating in a congestion range, with immediate support around the 6,700–6,580 spot zone and resistance around 7,220 spot levels. A decisive close above 7,220 is essential for a sustainable up move towards 7,800 spot levels.
Nifty outlook: Can bulls overcome the 22,800–23,000 hurdle?
On the Nifty, Vipin Kumar said the benchmark index bounced back from the structural price support zone of 22,180–21,740 spot levels amid extremely low levels of the FII long-short ratio. The bounce-back rally is likely to face resistance around the 22,800–22,850 spot zone.
Overall, the chart structure remains negative as long as the index trades below the 22,850–23,000 spot zone on a closing basis. Elevated crude oil prices, rising US bond yields, persistent FII selling and a depreciating INR remain key concerns for domestic markets.
Ajit Mishra, SVP – Research, Religare Broking, said, technically, the 22,800–22,850 zone is likely to act as the immediate hurdle, followed by broader resistance around 23,000–23,200, while 22,600–22,400 remains the key near-term support.
“With the broader market structure remaining cautious amid elevated global macro risks, volatility is likely to stay high, favoring a selective, stock-specific approach as opportunities emerge,” he added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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