Daily Markets - Oct 9, 2020 - Mr. Deepak Jasani, Head of Retail Research, HDFC Securities
Indian benchmark indices rose for the seventh consecutive session on Oct 09, its best winning streak in almost a year. Nifty after easing at the start of the day, reversed direction and rose following the announcement of MPC meet outcome. At close, the Nifty was up 79.60 points or 0.67% at 11914.20. For the week, the Nifty rose 4.4%.
Volumes on the NSE were in line with recent average with Bank, IT and Infra indices doing well while FMCG, Auto, Metals and Pharma indices fell.
Banks and Housing finance stocks rose post the RBI MPC meet outcome even as the rates have been kept unchanged and stance remains accommodative. The MPC announced multiple steps to keep interest rates on long duration bonds under check. RBI finally gave a GDP forecast and expects a contraction at 9.5% for FY21 with downside risks. As the economy continues to be in a fragile state, recovery in growth assumes primacy. The RBI's intent to support the economy even in the wake of rising inflation is comforting.
Asian shares inched close to 2-1/2-year highs on Friday as revived hopes for a U.S. stimulus deal eclipsed weaker-than-expected jobs data, while mainland Chinese markets jumped after a week-long holiday. European equities and U.S. stock futures traded higher on Friday, as investors kept hopes for an American stimulus deal alive, at the end of a positive week for markets.
Markets have become overbought after relentless rise over the past 2 weeks. Advance decline ratio however continues to remain in the negative over the past few days suggesting profit taking in the broader markets. Over the next 1-2 days we expect even the Nifty to come under some pressure as largecaps also need to consolidate/correct after such a rise.