Trade Setup For Thursday: RBI Policy, Yields, Oil Prices Key Factors To Know Before Opening Bell

The Indian market is expected to continue its volatility on Thursday ahead of RBI's policy outcomes. In the early trade, Gift Nifty traded lower, however, Wall Street halted its 3-day losing spree after treasury yields eased from their 16-year highs. However, sentiment in domestic equities has been weak from the foreign investors' end as they continue to be net sellers.

In the previous session, Sensex ended at 65,226.04, down by 286.06 points or 0.44%, while Nifty 50 slipped by 92.65 points or 0.47% to end at 19,436.10. Bank Nifty nosedived by 435 points or 0.98% to close at 43,964.05. After hitting a new 52-week high, PSU Bank stocks underperformed the most. Except for IT and FMCG stocks, all other sectoral indices were in deep red.

MPC members will continue to meet on Thursday to discuss monetary policy outcomes, followed by the announcement on October 6th. 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.

Gift Nifty:

Gift Nifty, formerly known as SGX Nifty, traded at 19,448.5, down by 35 points or 0.18% in early trade on Thursday. The benchmark traded in the range of 19,490.5 and 19,354.5 after opening at 19,483.5.

Day Trading Guide For Thursday:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects a support level in the range of 19,300/19,250 for Nifty 50 on Thursday, however, resistance is factored around 19,600/19,650. While she sees Bank Nifty as having a support level of 43,600/43,550 with resistance around 44,300/44,350.

Meanwhile, Vinod Nair, Head of Research at Geojit Financial Services said, "Strong US job data is reinforcing Fed's hawkish stance and multi-year high US bond yields are signalling an impending interest rate hike. Globally, investors are adopting risk-averse strategies due to inflation concerns and the strengthening US dollar. And in India, despite a robust economy, premium valuations of midcaps and recent rally are augmenting consolidation. Interest-rate-sensitive sectors like real estate, banking, and metals are the most impacted category, while the FMCG sector is more optimistic in expectation of near-normal monsoon & festival demand. Auto is consolidating amid mixed growth numbers and in this weak period, large-cap are trading safe to hold on."

Intraday Stocks Picks:

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

1. Infosys: Buy at Rs 1444.35 with a stop loss of Rs 1420 for a target price of Rs 1520.

2. MTAR Technologies: Buy at Rs 2606 with a stop loss of Rs 2565 for a target price of Rs 2770.

3. Rico Auto: Buy at Rs 87.05 with a stop loss of Rs 85.50 for a target price of Rs 92.

Nifty Spot Index Support Level:

Rupak De, Senior Technical analyst at LKP Securities said, the Nifty exhibited volatility throughout the day but managed to recover from the lowest point of the day before closing. The overall market trend remains bearish, with the Nifty trading below critical moving averages. Looking ahead, the market may continue to follow a bearish trend as long as it remains below 19500, with initial support likely around 19330, a fall below the said level might take the Nifty towards 19250-19200.

Bank Nifty Index Support Level:

Kunal Shah, Senior Technical and derivative analyst at LKP Securities said, the bears in the Bank Nifty maintained their control, causing the index to break below the support at 44,200. The next immediate support level is positioned at 43,800, and a breach below this level could trigger aggressive selling pressure, potentially leading to a further 2% correction in the index. On the upside, the immediate resistance is in the range of 44,250 to 44,300. A breakout above this range may incite some short-covering moves in the index.

FII And DII Data:

On Wednesday, foreign institutional investors (FIIs) continued to pull out their money from Indian stocks and recorded an outflow of Rs 4,424.02 crore. Meanwhile, domestic institutional investors (DIIs) minimised some of the losses from FPIs selling by becoming net buyers with an inflow of Rs 1,769.49 crore.

Global Trends:

US stocks recorded their best single-day performance in weeks after Treasuries retreated from their 16-year highs. The Dow Jones Industrial Average surged 127.17 points or 0.4% to end at 33,129.55, while the S&P 500 index gained by 34.30 points or 0.81% to end at 4,263.75. Tech-heavy index Nasdaq Composite saw massive buying, rising by 176.54 points or 1.35% to close at 13,236.01.

The benchmark 10-year bond yield inched lower by 0.07 percentage points to 4.73 after touching a 16-year high of 4.8% owing to hawkish remarks of the Federal Reserve has bloomed fear of higher interest rates for a longer duration to tame inflationary pressures.

Furthermore, crude oil prices plummeted by 5%, becoming its largest single-day drop in over a year. Also, the US dollar index was weak and touched an intraday low of 106.51.

Both Asian and European shares faced selling pressure on Wednesday.

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.