Sensex, Nifty 50 May Open Flat With Inflation Data In Focus After RBI Policy; 3 Intraday Stocks To Buy

Indian market is likely to open between flat to positive note on Friday as traders will keep an eye on July month's inflation data which will be released later in the day. Gift Nifty edged higher, hinting upside in the opening bell, however, Asian cues traded on a mixed note. Also, investors will react to hawkish policy of RBI and US inflation figures. In the previous session, Sensex and Nifty 50 ended in the red with banking stocks dragging the performance.

Gift Nifty, formerly known as SGX Nifty, traded at 19,558, up by 18 points or 0.09% at 7.24 a.m. on Friday. The index's performance ranged between 19,563 to 19,546 levels after opening at 19,540.

Markets will react to RBI policy outcomes where it kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50% for the third time in row. Also, the MPC members decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

Turning hawkish, RBI raised the inflation target to 5.4% for FY24 from earlier 5.1%. Also, GDP growth is projected at 6.5% for the financial year.

In the early deals of Friday, Asian market traded on a mixed note after Wall Street settled steady overnight as the US inflation data came in cooler-than-expected. China's mainland Shanghai Composite Index dipped 0.3%, while Hong Kong inched lower and Austrailian shares traded broadly flat. South Korean's KOSPI index gained marginally, while Japan's Nikkei 225 outperformed with nearly 1% upside.

For Asian cues, Bloomberg reported that traders will be keeping a wary eye on the yen and the key 145 level versus the dollar, with a holiday in Tokyo potentially contributing to volatility as volume thins. The persistently wide yield gap between Japan and the US is keeping the yen weak and within sight of levels that triggered intervention by the finance ministry last year.

On Thursday, domestic equities ended in red after RBI's hawkish remarks while raising inflation target for FY24. Sensex settled at 65,688.18, down by 307.63 points or 0.47%, while Nifty 50 finished at 19,543.10, lower by 89.45 points or 0.46%. Banking stocks were the worst hit. However, BSE Midcap stocks dipped by 28.09 points, while Smallcap index shed 51.63 points. Further, Bank Nifty shed 338.90 points or 0.76% to end at 44,541.80, while BSE Bankex dipped by 407.12 points to finish at 49,973.30.

Surprisingly, both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) turned as net buyers in Indian stocks with an inflow of Rs 331.22 crore and Rs 703.72 crore respectively during August 10th trade.

At the forex market, Indian rupee closed at 82.7125 against the US dollar, gaining 0.12% from the previous day's print.

Wall Street ended in green, however, the upside was limited as traders reacted to the US inflation data which came in at 3.2%, rising for the first time in the year driven by costlier housing. However, core inflation excluding volatile and energy prices, eased to 4.7% which was better than expected --- signalling that the Federal Reserve is likely to keep key rates unchanged in forthcoming policies. Dow Jones Industrial Average gained by 53 points, while S&P 500 index ended broadly flat to 4,468.83, and the tech-heavy Nasdaq Composite inched up 16 points.

Friday's Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects Nifty Spot Index support to be around 19400/19350, while resistance to be in the range of 19700/19750. Meanwhile, Bank Nifty spot index support is likely around 44200/44150, and resistance at 45000/45050.

Parekh has recommended 'Buy' on three stocks for Thursday's trade. These are:

- Buy Cummins India at Rs 1764 with a stoploss of Rs 1740 for target price of Rs 1820.

- Buy Texmaco Rail Engineering at Rs 114.50 with a stoploss of Rs 112 for a target price of Rs 121.

- Buy Torrent Power at Rs 671.50 with a stop loss of Rs 660 for a target price of Rs 695.

Further, Ajit Mishra, SVP of Technical Research, Religare Broking said, "Nifty has been struggling to hold short-term moving average i.e. 20 EMA, mainly due to the underperformance from the banking pack. Besides, it is also facing the hurdle of a declining trendline around 19650. Amid all, global cues are still neutral and any deterioration on that front may further add to the pressure. We thus recommend limiting positions and waiting for clarity over the next directional move."

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.