RBI Board meet to set tone on Street

Nifty gained for the third week on the back of strong domestic macros with correction in the crude and rupee. Though the market remained rangebound for the better part of the week, the 50-share index gained 0.92% to end at 10682, dominated by heavyweights. The mid and small cap indices underperformed and lost 0.55% and 1.23%, respectively.

Sectorally, Bank Nifty gained 1.84%, led by the PSU banks which rose up to 2.52%, while private banks advanced 1.41%. FMCG, Energy and Infrastructure sectors ended in green while among the losers pharma index fell 3.55% dragged by Sun Pharma which lost 13% post poor results in Q2. Among others, Media and Metals lost 2.20%  each and Auto fell 1.78%. 

Foreign institutional investors (FIIs) bought equities worth Rs 3,358 crore while the domestic institutional investors (DII) sold shares worth Rs 1,548 crore.

In the week gone by, the market trend revolved around the earnings season that remained mixed, partial appreciation in rupee, weakening crude oil prices and positive global cues. The rupee gained 1% and ended at 71.92 and crude also ended lower by 4% at 66.76 per barrel as Opec forecasts excess supply for 2019. October month retail inflation eased to 13 months low at 3.31% and the trade deficit widened to $17.13 billion due to higher crude oil import bill. 

In other events, Ashok Leyland MD and CEO resigned post second quarter results announcement and stock was down by 11%. YES Bank chairman Ashok Chawla resigned with immediate effect and the stock reacted negatively, closing 16% lower week on week. In the block deal, ING group sold its entire 3.7% stake in Kotak Bank at Rs 1,130 per share which was absorbed by the FIIs and stocks gained 3% in the last week. Telecom players hogged limelight after media report said that Reliance Jio was considering tariff hike. Bharti Airtel gained 11%, one of the top contributor to Nifty’s gains along with Reliance Industries (RIL), ICICI Bank and HDFC twins. Jet Airways was the star performer, gaining 35% on news of early formal proposal from Tata group to take over the company.

In the global events this week, the US markets are closed on Thursday. The US and Euro flash manufacturing and services PMI data will be released on Friday. Reserve Bank of India (RBI) board will be meeting today to discuss a few important points such as PCA (prompt corrective action) and lending norms, liquidity and credit issues, transfer of surplus reserves. Indian markets are closed on Friday.

For this short week, the market will take cues from the outcome of the RBI Board meet with PSU Banks, NBFCs and telecom and FMCG stocks in focus. Technically on weekly charts, Nifty made “Hanging Man” pattern giving break out from the narrow consolidation range of 10450-10650 and closed tad below its 200 DMA. For the week, Nifty supports are at 10630-10560-10440 levels and resistance at 10760-10850 levels. The probable trading range for the week could be 10500-10850.

The writer is VP-retail research, Motilal Oswal Financial Services

CAUTION HEAD

• Nifty made “Hanging Man” pattern giving break out from the narrow consolidation range of 10450-10650 and closed tad below its 200 DMA
   
• Market will take cues from the outcome of key important RBI board meet