Weekly Market Wrap: D-street ended in red as RBI keeps rates unchanged. What lies ahead? 

Indian equity benchmarks ended the week with minor cuts as the Reserve Bank of India (RBI) kept its key interest rate unchanged for a sixth consecutive meeting, in line with expectations. The BSE Sensex declined 490 points, or 0.68 per cent, at 71,595.49 during the week ended on February 09, 2024. While the Nifty slipped 71 points, or 0.33 per cent, to 21782.5.

Sector-wise, the BSE Oil & Gas index surged the most (3.8 per cent) during the week gone by. While BSE Healthcare index registered a gain of 3.4 per cent followed by BSE Realty jumped 2.5%. On the other hand, the BSE FMCG index fall 2.3 per cent.  

As many as 24 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 11.4 per cent, State Bank of India emerged as the top gainer in the index. It was followed by Bharat Petroleum Corporation (10 per cent), Coal India (8.6 per cent), Sun Pharmaceutical Industries (8.3 per cent), and Tata Consultancy Services (4.2 per cent). Tata Motors and Hero MotoCorp also advanced by over four per cent.  

On the other hand, UPL, ITC, and Bajaj Finserv declined 14.3 per cent, 5.6 per cent, and 4.9 per cent, respectively. 

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, The FPI investment trend of selling in equity and buying in debt witnessed in January is continuing in February. Through 9th February FPIs had sold equity for Rs 3074 crores and bought debt worth Rs 15093 crores.

This takes the total equity selling in 2024, so far, to Rs 28818 crores and debt buying to Rs 34930 crores. ( Source: NSDL). “The main trigger for this divergent trend in equity and debt is the high valuation in the Indian equity market and the rising bond yields in the US” Vijayakumar said.

Market Macros: Mahavir Lunawat, Managing Director of Pantomath Capital Advisors, said “The Indian market traded in a range with volatility for the week. The HSBC service PMI data for the month of January came out around 61.8, ahead of estimates of 60. The growth in service PMI is due to rising export and domestic new business orders”.

Lunawat added: "The RBI came out with their monetary policy decision. It kept all policy rates unchanged as expected. The repo rate, MSF, and SDF rates stand around 6.5%, 6.75%, and 6.25% respectively. It maintained the withdrawal of accommodation stance.  The RBI's GDP and CPI forecast are seen around 7% and 4.5% for FY25."   

On global markets he said the US indices remained positive for the week, sustaining above lifetime high levels. While the unemployment rate held steady at 3.7%, and wage growth unexpectedly accelerated. The strong nonfarm job data indicates resilience in the economy. “Hopes of a policy rate cut in March are now almost ruled out. A Fed governor indicated that any rate cuts would happen more slowly than financial markets anticipate. They want to make sure inflation is consistently heading towards their 2% goal before making significant cuts”, Lunawat said.

Nifty outlook: Rupak De, Senior Technical Analyst at LKP Securities said, "Nifty started flat and remained sideways during the trading session. It found support at the 20DMA for the second day in a row. The trend could weaken if it decisively drops below 21,690. A decisive fall below 21690 may trigger a correction towards 21,500. On the contrary, if it moves above 21,800, we might observe a recovery in the near term”, De said. 

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