The stock market ended on a positive note on Monday, with both benchmark indices reaching record highs. The BSE Sensex surged by 384.30 points, closing at 84,928.61, while the NSE Nifty climbed 148.10 points to settle at 25,939.05. Gains in sectors such as auto, oil and gas, and financial services played a key role in driving the market upward.
Out of the Nifty 50 companies, 34 stocks advanced, while 16 experienced declines. Bajaj Auto, Mahindra & Mahindra (M&M), ONGC, Hero Motocorp, and SBI Life were among the top performers, contributing to the rally. In contrast, Eicher Motors, ICICI Bank, Divi’s Labs, Wipro, and IndusInd Bank saw losses due to profit booking following recent gains.
The market’s upward momentum was primarily fueled by anticipation surrounding the upcoming Monetary Policy Committee (MPC) meeting of the Reserve Bank of India (RBI), scheduled for October 7 to 9, where a decision on the repo rate is expected.
With potential rate cuts on the horizon, India VIX, the volatility index, spiked by over 9%, indicating some caution among investors.
VLA Ambala, Co-Founder of Stock Market Today, commented on the session’s performance, pointing to broader economic factors at play. “In today’s session, India VIX rose by more than 9% as the market awaits the MPC policy and the REPO rate cut decision. Notably, India’s fast composite PMI recorded slower growth in September, marking the slowest growth rate of 2024 for the manufacturing and service sectors,” she said.
Ambala explained the potential implications of the RBI’s decision, particularly in relation to the US Federal Reserve’s rates. She noted that a repo rate cut by the RBI could increase liquidity in the economy, leading to further gains in the equity market and boosting asset classes such as real estate.
“The RBI needs to match the US Fed rate to stay globally competitive. If the RBI cuts the repo rate, more liquidity will flow into the economy, possibly fueling a bullish market trend. Investors could also see better returns in sectors like real estate and the equity market,” Ambala said.
“The banking and NBFC sectors are already adjusting to the possibility of a rate cut, and we might see a decline of 100-200 basis points over the next 1.5 years. Given the market’s resilience, I expect it to adapt quickly to these changes,” she added.
Currently, major indices such as Nifty, Bank Nifty, Financial Services, Mid Cap 100, Mid Cap 150, Next 50, FMCG, Consumption, Metal, Infrastructure, and Auto are all trading at record levels. Sectors like NBFCs, realty, infrastructure, and PSU stocks are expected to remain in focus as potential rate cuts could present opportunities for mid-term investors.
Technical indicators suggest that the market remains in a bullish phase, with the Relative Strength Index (RSI) for Nifty standing at 74 on the daily, 75 on the weekly, and 83 on the monthly charts.
However, Ambala advised investors to approach the market with care. “The Nifty index may find support at 25,870 and 25,680, with resistance likely at 26,050 and 26,130 in the upcoming session,” she said.
