Indian markets ended sharply higher today, extending gains to the third day. The Sensex finished about 350 points higher at 41,142, extending gains to about 1,400 points in just three sessions. This is quite a reversal in fortunes for Indian markets, when the Sensex had plunged nearly 1,000 points in Saturday’s special session. Positive global markets, softer oil prices and hopes of an economic recovery and better earnings growth have helped Indian equities to rebound strongly over the past three sessions. The broader Nifty today settled 0.9% higher at 12,090.
According to a private survey India’s manufacturing and dominant services industry if off to a strong start this year, with activity in January accelerating to multi-year highs. But analysts say that concerns about the coronavirus outbreak are likely to keep markets volatile in the short-term. Also, analysts expect the Reserve Bank of India to maintain its accommodative stance in monetary policy, due tomorrow.
Here is what experts say on the market rebound and what to expect from RBI’s monetary policy tomorrow:
S Ranganathan, Head of Research at LKP Securities
“Continuing the big upmove witnessed on Tuesday, the BSE Sensex rose a further 350 points today ahead of the monetary policy to be presented by RBI tomorrow. The buoyancy in key pivotals accelerated during afternoon trade as India’s Service Sector growth hit a 7-year high, boosting optimism.”
Vinod Nair, Head of Research, Geojit Financial Services
“Indian markets are mirroring the global markets. With the overreaction on the Budget being mostly done, the market’s focus will turn to how global events and Q3 results span out. Inflation being on the higher side there is no further room left for the central bank to tweak rates and is expected to follow an accommodative stance in the policy due tomorrow.”
Shanti Ekambaram, President – Consumer Banking, Kotak Mahindra Bank
“From a macroeconomic perspective, growth continues to be a challenge. GDP for FY20 is likely to be around 4.8%-5% and it is estimated that FY’21 is likely to see growth in the 5.5% to 6% range. Recent high frequency indicators show some green shoots. However, need to see how the growth trajectory pans out. The Union Budget has estimated a higher fiscal deficit of 3.8% for this year and a glide path to 3.5%. Inflation is likely to trend at a level higher than RBI’s 4% to 4.5% target this quarter. Against this backdrop, the RBI is likely to maintain status quo on rates as well as its monetary policy stance. They are likely to continue an accommodative stance to support growth.”
Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services
“Post budget, the market has shifted its focus back to fundamentals and earnings. With strong PMI data, in-line January auto sales numbers and decent Q3FY20 earnings season so far, the sentiments have turned positive. Market now is awaiting the monetary policy which is due on Thursday and where RBI is expected to maintain a status quo. However, the outlook given by RBI would be highly watched out. Further, decline in oil prices and rupee appreciation is highly positive for India given its tight fiscal situation. However, concerns regarding coronavirus is likely to keep markets volatile in the short-term.”
“We are hopeful that the good surface moisture and higher level of water reservoirs are going to increase the rabi production in the rain fed areas. So agriculture will meaningfully buoy the Q1 GDP. Our proprietary technical research tells us that the bottom of 11,614 formed Monday, is unlikely to be broken and the markets are headed higher.
Global markets have been buoyed by the growing expectations that central banks around the world will act should the outbreak of the coronavirus intensify and threaten global growth.”
Rohit Singre, Senior Technical Analyst at LKP Securities
“Nifty was buying for third consecutive day and closed near day high at 12093 with gains of 113 points, forming a bullish candle on daily chart. Index managed to close above its previous break down zone which suggest one should keep buy-on-dip strategy intact. Support for Nifty is coming near 12,030-11,970 zone and resistance is coming near 12,140-12,200 zone. Nifty Bank closed a day at 31,002 with gains of more than 1%. Support has shifted to 30830-30600 zone and resistance is coming near 31,150-31,330 zone”.
Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities
“Nifty witnessed massive volatility in the last week. Budget had triggered selling pressure across the markets but was followed by a quick recovery in the following trading sessions. We believe the index is in a structural uptrend and is expected to conquer higher levels. The 11900 level is a strong support level while resistance is now seen at 12430. Buying on dips is advisable in the near term. Metals and private banking remain strong. Action is expected to continue in the midcap space.”