Dalal Street Corner: Market snaps 3-day losing streak, ends higher on ‘relief rally’ as RBI keeps rates unchanged—What should investors do on Monday?

Snapping three-day negative closing, Indian markets ended positive as the Reserve Bank of India kept the policy rates unchanged in its first MPC meet of the new Financial Year (FY 2022-23). Benchmarks Nifty50 edged 0.82% higher as the 50-share blue chip index settled near 17,800, while the 30-share Sensex added over 400 points to end higher by 0.7%.  

Meanwhile, Nifty Bank too swung upward in the closing trade as the banking index rose by around 200 points to settle above 37,750.  

India Volatility Index (VIX) closed below 18-mark as Nifty midcap and small cap indices gained 0.98% and 0.39% respectively.  

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Barring IT, which closed flat with negative bias, all sectors gave a positive closing. Nifty FMCG and Metal rose the maximum with over 2% gains. Oil & gas and consumer durables were other notable performers with gains of 1-1.6% gains.  

A relief rally

Vinod Nair, Head of Research at Geojit Financial Services, said the market was cautious during the last 2-3 days ahead of the RBI meet and its future policy stance.  Measures being in-line with market expectations led to a relief rally, said Nair.

“The focus has shifted to the Q4 earnings season, which will start next week, initiated by the IT & Banking sector. Outlook for the banking sector is robust due to rapid bounce in credit growth & improvement in balance sheet while preview for IT is mixed as Q4 is seasonally weak," added Nair. 

Technical Check 

The Nifty started the last week on a strong footing, however stumbled near the junction of the daily & the weekly upper Bollinger bands & a falling trendline drawn from the October high, said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

These parameters were present near 18100-18200 zone that push the index down, he said.  

"On the way down, the Nifty filled up the recent gap area of 17791-17703 & found support near lower end of a reverse rising channel, which is near 17600. Over there, the index has formed a bullish outside bar on the daily chart. On the weekly chart, the index has formed a candle that resembles a Doji pattern, which indicates loss of momentum after the recent run up from 17000. The daily momentum indicator is also showing signs of fatigue. The overall structure suggests that a short-term consolidation is on the cards that can develop in the range of 17500-18000 over the next couple of weeks," added the expert.  

"The benchmark Nifty found support around the previous session's low resulting in a positive close for the day. However, on the higher end, the Nifty found resistance around the lower band of the rising channel,” said Rupak De, Senior Technical Analyst at LKP Securities.

Going forward, the trend may continue over the near term, says the expert. “On the higher end, the index may find resistance at 18000 whereas, on the lower end, support exists at 17650," he added.

Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.