Market Today: RBI MPC outcome, global market recovery, Israel war, Oil down

Stock Market Today, October 09, 2024: All eyes are on the RBI policy meeting outcome, which is expected to influence market sentiment today. Amid this anticipation, benchmark indices—Nifty50 and Sensex—are likely to see a positive opening.

RBI’s new monetary policy committee may be well-placed to set the stage for an interest rate cut as global easing trends emerge and growth in the world's fastest-growing major economy shows signs of moderation. 

While most of the 35 economists surveyed by Bloomberg expect the Reserve Bank of India’s six-member MPC to maintain the repurchase rate at 6.5 per cent, some anticipate a shift to a ‘neutral’ stance for the first time since June 2019, moving away from its current hawkish position. READ MORE

 

Apart from that, at 6:34 AM, GIFT Nifty Futures were trading 25 points higher at 25,157, suggesting a flat to positive start for Indian markets.

Wall Street recovers 

Wall Street's benchmarks closed up on Tuesday, recovering some losses from the previous session as investors returned to technology stocks and shifted their focus to upcoming inflation data and the beginning of the third-quarter earnings season. 

The S&P 500 rose 0.97 per cent, while the Nasdaq Composite climbed 1.45 per cent. The Dow Jones Industrial Average gained 0.30 per cent.

Additionally, imports of goods and services into the US dropped 0.9 per cent to $342.2 billion in August of 2024 after reaching a two-and-a-half-year high in the previous month. 

All three main indices had experienced a sell-off on Monday, dropping roughly 1 per cent each due to rising Treasury yields, escalating Middle East tensions, and a reassessment of US rate expectations. 

Investors are now awaiting FOMC minutes release (today) and the consumer price index data, set to be released this Thursday, for insights on future interest rate directions.

Asian markets  

Asia-Pacific markets rebounded on Wednesday following a widespread decline in the previous session and as Wall Street rallied overnight. 

Japan’s Nikkei 225 rose 1 per cent, while the broader Topix gained 0.5 per cent. Australia’s S&P/ASX 200 jumped over 0.5 per cent. 

Additionally, the Reserve Bank of New Zealand implemented a rate cut of 50 basis points, marking its second consecutive reduction.

Meanwhile, South Korea’s markets remain closed for a public holiday.

Middle East conflict 

According to media reports, Hezbollah militants have claimed to have wounded Israeli soldiers by detonating an explosive device and engaging in clashes near the Lebanese town of Blida, close to the border. The Israel Defense Forces (IDF) stated they could not confirm these claims. 

Meanwhile, a series of strikes have targeted Beirut’s southern suburb of Dahiyeh, causing extensive destruction, including the collapse of four adjacent residential buildings in the Burj Al-Barajneh area, according to reports. On Monday, 36 people were reported killed, with 150 injured in strikes across southern Lebanon, the reports said.

Oil prices

Crude oil futures fell more than 4 per cent on Tuesday as the rally spurred by heightened geopolitical risk slowed, with the market awaiting Israel's response to Iran. 

The West Texas Intermediate November contract fell 4.63 per cent to $73.57 per barrel. Similarly, the Brent December contract dropped 4.63 per cent to $77.18 per barrel, with the global benchmark remaining relatively unchanged year-to-date.

Gold rates 

Gold prices fell over 1 per cent on Tuesday, on track for their largest percentage drop in a month and a half as recent US employment data dampened expectations for a major rate cut. 

Spot gold decreased by 1.1 per cent to $2,615.50 per ounce, marking a five-session losing streak and moving further from the record peak of $2,685.42 reached on September 26. U.S. gold futures declined by 1.2 per cent to $2,634.60.

Other triggers

Global index provider FTSE Russell on Tuesday said it would include India's sovereign bonds in its Emerging Markets Government Bond Index (EMGBI) starting September 2025, following index inclusion by JP Morgan and Bloomberg Index Services, potentially drawing billions of dollars into local bonds.

State elections update
 

In the Assembly election results announced on Tuesday, the Bharatiya Janata Party (BJP) successfully returned to power for a third consecutive term in Haryana, achieving its best-ever vote share and seat tally. This defied predictions of a possible defeat due to perceived discontent among farmers and youth in the state. 

In Jammu and Kashmir, where Assembly elections were held for the first time in a decade following the revocation of Article 370, the BJP achieved its best performance in terms of seats and vote share. 

However, the rival National Conference emerged as the single-largest party, aiding its pre-poll alliance—comprising the Congress and Communist Party of India (Marxist)—to surpass the majority mark.

Market activity  
 

On October 08, foreign institutional investors (FIIs) continued their selling trend, offloading shares worth Rs 5,729.60 crore, while domestic institutional investors (DIIs) purchased shares worth Rs 7,000.68 crore.

Q2 results preview

Tata Consultancy Services (TCS), India's largest IT firm, is set to announce its financial results for the July-September quarter of fiscal year 2024-25 (Q1FY25) on October 10. Analysts predict a modest single-digit growth in both revenue and profit compared to the September quarter of FY24. According to estimates compiled by Business Standard, TCS is expected to report an average revenue increase of 7.2 per cent year-on-year, totaling approximately Rs 63,993.2 crore. READ MORE

Meanwhile, Reliance Industries Ltd (RIL) is scheduled to meet on October 14 to review and approve its financial results for the September 2024 quarter (Q2FY25). Analysts anticipate another challenging quarter for RIL, primarily due to declining refining margins. Two brokerage firms, ICICI Securities and Nuvama, forecast a potential profit decline of 1-13 per cent year-on-year for Q2FY25, while Kotak Institutional projects a modest 2.2 per cent increase. Revenue growth, based on analyst estimates, may reach up to 4 per cent. READ MORE

IPO corner  

NeoPolitan Pizza and Foods Limited's IPO (SME) will debut on the bourses today. Meanwhile, Garuda Construction and Engineering Limited's IPO (Mainline) and Shiv Texchem Limited's IPO (SME) are entering Day 2 of subscription.

Previous session recap

Indian stock markets bounced back on Tuesday, ending a five-day losing streak. The BSE Sensex gained 584.81 points, or 0.72 per cent, to close at 81,634.8, while the Nifty50 closed at 25,013.15, up 217.38 points or 0.88 per cent, as investors reacted to the Assembly election results and the moderation of the dazzling rally in Chinese stocks.

Here's how analysts are assessing today's (October 09) trading session:
 

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas

On the daily charts, we can observe that the Nifty has held on to the 61.82 per cent Fibonacci retracement level (24,800) and witnessed a pullback. The positive divergence on the hourly chart has finally played out and the nifty is now in a pullback mode. The recent rally is likely to continue towards 25,275 – 25,350 which coincides with the 40 hour average and the hourly upper Bollinger band. On the downside 24,750- 24,690 shall act as a support zone from a short term perspective.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities

The short term trend of Nifty continues to be positive with range bound action. The market is now set to challenge another opening down gap resistance of August 2 around 24,960. Hence, one may expect the Nifty to move towards 24,960 and 25,100 levels in the next one week. Immediate support is placed at 24650 levels.

Rupak De, Senior Technical Analyst at LKP Securities

The RSI has made a bullish crossover in the shorter timeframe, further supporting the positive outlook. In the near-term, the Nifty50 index may move towards the 25,350–25,400 range. On the downside, support is placed at 24,850, and a break below this level could lead to weakness.