Sensex reclaims 50,000 over Budget euphoria; Nifty above 14,600

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Market indices closed at record highs on Friday, after apex lender RBI in its Monetary Policy Committee meeting kept the policy stance ‘accommodative’ and held the key lending repo rate unchanged. Sensex ended 446 points higher at 45,079 and Nifty gained 124 points at 13,258. During the session, Sensex touched a lifetime high of 45,148 and Nifty hit an all-time high of 13,280. During the week, Sensex and Nifty have risen 929 points or 2.1% and 289 points or 2.23%, respectively.

Yesterday, Sensex ended 14 points higher at 44,632 and Nifty gained 20 points to hit 13,133.

The RBI’s Monetary Policy Committee, led by Governor Shaktikanta Das, announced the central bank’s policy stance amid high inflation concerns. The apex bank has kept the policy stance ‘accommodative’ as per its resolution during the previous MPC meet announcement and kept the key lending repo rate unchanged.

“MPC decided to continue with accommodative stands of monetary policy as long as necessary, at least till current financial year & into next year to revive growth on a durable basis & mitigate the impact of COVID-19 while ensuring that inflation remains within target,” said the RBI Governor.

Sensex and Nifty opened higher in line with global peers, which were buoyed amid positive macroeconomic data flow from China, US coronavirus stimulus negotiations, and developments on the COVID-19 vaccine front. By the later session, markets were trading mildly positive overseas, following a report that said Pfizer expects to ship half the Covid-19 vaccine doses it originally planned for this year due to supply chain issues.

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In US, the Pentagon announced that the two firms were added to a blacklist of alleged Chinese military companies. Investors closely monitored progress toward a stimulus deal as lawmakers made a strong push to break a stalemate over how to boost an economy that continues to be hurt by the pandemic.

UltraTech Cement, followed by L&T, M&M, Maruti, ONGC, Bharti Airtel, PowerGrid and ITC were among the top gainers in the Sensex pack. On the other hand, Asian Paints, Infosys, Reliance Industries and Tech Mahindra were among the laggards. Among sectors, all the indices closed in bullish territory, with 2% advance on private bank and banking stocks, followed by 1% gain in metals, FMCG, pharma and financials.

Ajit Mishra, VP – Research, Religare Broking said,” With all the major events behind us, we feel global cues would dictate the market trend ahead. Besides, news related to COVID vaccines will also be in focus. Mostly rate-sensitive ended on strong footing and we may see follow-up buying next week. Having said that, traders should not get carried away with the prevailing buoyancy and stick to quality names as we can’t ignore the possibility of an intermediate corrective phase.”

Vinod Nair, Head of Research at Geojit Financial services said, “RBI’s decision to keep policy rates unchanged and maintain an accommodative stance for the current and upcoming year is well taken by the market. The possibility for a further rate cut in the near term can be ruled out considering the elevated levels of inflation. However, positively RBI has ensured ample liquidity support on a timely basis in the form of Open market operation, TLTRO and reverse repo. Globally, renewed US stimulus negotiation and vaccine roll-out has underpinned optimism, this will help the domestic market to maintain its euphoria”

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Nirali Shah, Senior Research Analyst, Samco Securities said,”Nifty 50 index closed the week on a positive note and most of the sectoral indices such as Nifty Metal and auto contributed positively. The short-term trend continues to remain bullish, however, the index is trading at rising channel resistance on the weekly chart. So traders are advised to maintain a bullish outlook but not to trade highly leveraged or aggressive bets. Sometime soon a mild dip can trigger a profit-taking move in markets. A break below 12900 can be taken as a caution signal for any short term decline.”

Indian rupee, the domestic currency appreciated by 13 paise to close at 73.80 per US dollar on Friday’s as the Reserve Bank of India maintained status quo on benchmark interest rate for the third time in a row.

Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking  said,” A combination of a weak dollar index, optimism on the vaccine front, renewed round of fiscal stimulus talks in the United States and robust inflows give the rupee a slightly appreciating bias in the near term. However, 73.20 and eventually 73 will be strong hurdles for the rupee to breach given RBI’s intervention is likely to continue in the coming sessions. We are expecting the RBI to mop up dollars in the spot market and simultaneously intervene in forwards to sterilize the liquidity impact.”