Stocks increase repo in their walk

Shares gave up most of the day’s gains to close slightly higher after Friday’s repo rate hike, signaling the market could consolidate in the short-term following a sharp rally from mid-month lows. Six.

However, the positive for the market is that rate hikes may be behind the scenes and positive rate hikes may not be happening right now.

Market reaction

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Market reaction

“We believe commodity prices have cooled down, including crude oil, and inflation may peak. We expect the RBI may not be as active in the next policy meetings and is more data-driven on the inflation numbers,” said Motilal Oswal, managing director and CEO of Motilal Oswal Financial Services, said.

The Nifty Index closed almost flat at 17,397.5, while the Bank Nifty closed 0.4% higher at 37,920.6. Nifty closed down 77 points from the high of the day while Bank Nifty closed below the high of the day 230 points.

The 10-year yield rose 13 bps to 7.29%, as dealers did not tie up short positions after the rate hike took place at the end of expectations, while the rupee strengthened.

Nilesh Shah, chief executive officer of Kotak Asset Management Co. “Given growth is widespread and private investment is showing signs of resurgence, the RBI has had several repo rate hikes to keep inflation in check,” said Nilesh Shah, chief executive officer of RBI. Kotak Asset Management Co. said. We advise investors to exercise caution, recommending phased purchases when prices drop. “

Nirmal Jain, president of IIFL Group, hopes the preload will prevent a potentially steep drop in the rupee, at least for now, and this could “add more favor to FPI inflows”. .

The rupee rose 23 paise to close at $79.24 a dollar, which analysts attribute to falling oil prices. Brent crude fell below the $100/bbl mark, significantly below the close above $121/bbl in July.

Anindya Banerjee, vice president of currency and interest rate derivatives at Kotak Securities Ltd. “We expect repo rates to head towards 6% before peaking and this will allow the real exchange rate to support the rupee through transfer,” said.

However, global uncertainties should prevent any significant appreciation of the rupee, the rupee is likely to remain range-bound in the coming days in the near-term, experts said.

Akhil Mittal, senior, fixed-income fund manager, Tata Mutual Fund, said the 50 bps gain is monetary support. He said he expects the rupee to stay in the 79-80 per dollar range and there are broader directional signals from the movement in the dollar index.

Bonds also rose on Friday.

“We expect interest rates to remain range bound (10-year benchmark G-Sec between 7.15% -7.40%) in the near term and as system liquidity remains volatile, we expect interest rates to remain range bound. we can continue to see a flat yield curve. “Mittal of Tata Mutual Fund said.

After 9 consecutive months of selling shares, foreign investors turned to buy in July and continued to be net buyers in August. Provisional data shows that FPI are net buyers. 1,605.81 crore worth of shares on Friday.

Although Nifty has gained 1.39% for the week, it has closed within a 15-point range in the last three sessions with intraday rebounds and sell-offs. Deepak Jasani, head of retail research at HDFC Securities, said the battle could be over soon and the market could have direction in the short term.

From the June 17 low, Nifty is up 14.6%, while Bank Nifty is up 17.4%.

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