Trade Setup For Friday: RBI Policy, US Job Data Key Factors To Know Before Opening Bell; Guide For Today

The Indian market is expected to open between flattish to slight upside on Friday tracking global cues which were broadly subdued. In the early trade, Gift Nifty inched up, while Asian shares were majorly up with Hong Kong shares outperforming. Japanese Nikkei 225 traded volatile. These followed US shares which ended slightly lower overnight. Among commodities, treasuries traded mixed, while bets in the dollar were cautious, and oil prices picked up momentum.

Investors focus on the US payrolls report which is expected to give some clarity on US Federal Reserve's policy prospects. At home, the main focus will be RBI's policy which will be announced later in the day, followed by forex reserves data.

A poll conducted by GoodReturns between September 20-28 showed that the RBI will maintain a status quo in rates for the fourth consecutive policy after aggressively hiking rates by 250 basis points cumulatively from May last year until February 2023.

In the previous session, Sensex and Nifty 50 gained despite continued foreign funds outflow. On Thursday, the 30-scrip benchmark ended at 65,631.57, up by 405.53 points or 0.62%, while Nifty 50 jumped by 109.65 points or 0.56% to end at 19,545.75. Bank Nifty surged by 249.30 points or 0.57% to close at 44,213.35. India's volatility index declined by nearly 6%. Except for FMGC, metal, pharma and PSU banks, all other sectoral indices were in the green. Media, IT and auto stocks outperformed.

Talking about the performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The positive signal from the PMI data and the correction in the crude price boosted the market sentiment. Reduction in FIIs selling rebound sectors like bank and IT shares today. While regarding RBI policy, positively, the market expects the interest rate to be hold-on as the external demand outlook indicates a muted trend fearing a disinflationary trend in the future."

Gift Nifty:

Gift Nifty, formerly known as SGX Nifty, traded at 19,607, up by 2.0 points or 0.01% in early trade on Friday. The benchmark traded in the range of 19,621.0 and 19,601.5 after opening at 19,605.

Day Trading Guide For Friday:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects a support level in the range of 19,450/19,400 for Nifty 50 on Friday, however, resistance is factored around 19,700/19,750. While she sees Bank Nifty as having a support level of 43,900/43,850 with resistance around 44,500/44,550.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Participants shouldn't read much into a single day rebound and wait for the Nifty to reclaim the short-term moving average (20 EMA) for sustained recovery. At present, select IT majors are at the forefront while others are playing supportive roles on a rotational basis. We need improvement in the broader participation to change the market course. Amid all, it is prudent to keep a check on leveraged positions and prefer index majors over others."

Intraday Stocks Picks:

Parekh recommended buying three stocks during Friday's trade. These are:

1. Bajaj Auto: Buy at Rs 5,011 with a stop loss of Rs 4,940 for a target price of Rs 5,200.

2. CDSL: Buy at Rs 1,325 with a stop loss of Rs 1,305 for a target price of Rs 1,400.

3. Sumitomo Chem: Buy at Rs 440.80 with a stop loss of Rs 433 for a target price of Rs 470.

Nifty Spot Index Level:

Rupak De, Senior Technical analyst at LKP Securities said, the Nifty has shown an upward movement following a hammer formation on the daily timeframe. Additionally, there is a hidden positive divergence observed on the daily RSI. The strength of the trend is expected to persist as long as the index stays above 19,430. On the upper side, resistance is placed around 19,600, which may act as immediate resistance. A decisive move above 19,600 could propel the index to higher levels."

Bank Nifty Index Support Level Today:

Kunal Shah, Senior Technical and derivative analyst at LKP Securities said, Bank Nifty bulls displayed resilience before the RBI policy announcement by maintaining support in the 44,000-43,800 range. Immediate resistance on the upside lies at the 44,400-44,500 zone. A breakthrough here could trigger short-covering, potentially driving the index towards the 45,000 mark, which currently has the highest open interest on the call side. The RBI policy decision may influence the near-term direction of the index.

FII And DII Data:

On Thursday, foreign institutional investors (FIIs) continued to pull out their money from Indian stocks and recorded an outflow of Rs 1,864.20 crore. Meanwhile, domestic institutional investors (DIIs) minimised some of the losses from FPIs selling by becoming net buyers with an inflow of Rs 521.41 crore.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author or 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.