Closing Bell: Sensex, Nifty end flat amid volatility; IT drags, realty, banks shine

Market ended flat in the volatile session on April 5 after Monetary Policy Committee of Reserve Bank of India (RBI) by majority decided to keep the key rates unchanged. At close, the Sensex was up 20.59 points or 0.03 percent at 74,248.22, and the Nifty was down 1 point at 22,513.70.

We wrap up today's edition of the Moneycontrol live market blog, and will be back Monday morning with all the latest updates and alerts. Please visit https://www.moneycontrol.com/markets/global-indices for all the global market action.

The Nifty opened on a weak note and consolidated during the day. On the daily charts we can observe that the Nifty consolidated and traded within the range of the previous trading session. The Nifty appears to be consolidating after a sharp run-up which is a healthy sign. We expect the consolidation to breakout on the upside and thus minor degree corrections should be bought into. On the upside we expect levels of 22700 which is the upper end of the rising channel. On the downside crucial support is placed at 22400 – 22350.

As far as Bank Nifty is concerned, it has been outperforming and we expect the outperformance to continue. On the upside the immediate hurdle is placed at 48636 and above that the rally is likely to continue till 49300. The zone of 47700 – 47500 shall act as a crucial support zone from short term perspective. On the downside 48000 is the crucial support from short term perspective.

Lacklustre trend prevailed through the session on weak global cues, as investors exercised caution and resorted to selective buying in frontline banking stocks after RBI as anticipated maintained steady interest rates. However, selling in IT stocks continued on concerns that cut in global IT spend would hurt earnings of domestic software companies. More clarity would emerge after next week's TCS results.

It turned out to be a muted session on Friday as Nifty oscillated in a narrow range and ended almost unchanged. Meanwhile, a mixed trend on the sectoral front kept the traders occupied wherein realty, FMCG and banking were among the top performers while IT and energy traded dull. Besides, the continued traction on the broader front further supported the sentiment as both midcap and smallcap gained in the range of 0.5%-0.8%.

The recent consolidation in Nifty amid weak global cues indicates time-wise correction and traders should maintain a positive bias until the Nifty holds 22,200 level. However, stock selection is tricky in the prevailing scenario due to a mixed trend across sectors so traders should maintain extra caution on that part. Besides, one shouldn’t go overboard and restrict positions in quality midcap and smallcap names.

Although the RBI policy meeting unfolded as anticipated, concerns over food inflation and warnings of a heat wave tampered sentiment. While the main domestic indices concluded with marginal movement, the Bank Nifty edged higher, propelled by robust credit growth in Q4FY24. The global sentiment was dampened by the rise in oil prices and tensions in the Middle East. Investors remain attentive to upcoming US non-farm payroll and unemployment data, seeking clarity on the Federal Reserve's future rate path.

The rupee closed at 83.30 against the dollar, marking a gain of 0.14 from yesterday's close of 83.44. A weak dollar throughout the day offered support, but it was mainly positive comments from the RBI Governor about the stronger Indian economy that bolstered the rupee's resilience in the face of geopolitical tensions. With elections looming, rupee volatility is expected to persist, especially as the dollar's trend remains uncertain. The expected range for the rupee is between 83.15-83.55.

The index has remained sideways throughout the session, reflecting a pause in the market trend following the formation of a hanging man pattern. The sentiment may continue to remain sideways due to the lack of a directional breakout or pattern formation. At the higher end, 22650 might prove to be a crucial resistance level. A fresh rally is not anticipated as long as the index remains below 22650. On the lower end, support is evident at 22300; if breached, the index might decline towards the 22000-21900 range.

Market registers gains for 3rd straight week, Nifty rises 1%
Midcap index rises 4% to post biggest weekly gain in 7 months
Nifty Bank gains over 2%, biggest weekly gain in 4 months
Except FMCG, all indices record gains, financials gain the most

Following the RBI policy announcement, the Bank Nifty maintained its robust momentum, remaining above the crucial level of 48,000. This suggests the potential for reaching new all-time highs next week, possibly even touching the 50,000 mark. Notably, aggressive put writing has been observed at lower strikes, establishing a supportive base in the 48,200-48,000 zone, which is anticipated to serve as a cushion for bullish sentiment.

Indian rupee ended 16 paise higher at 83.28 per dollar on Friday against Thursday's close of 83.44.

: Indian equity indices ended on a flat note in the volatile session on April 5 after Reserve Bank of India kept its key rates unchanged.

At close, the Sensex was up 20.59 points or 0.03 percent at 74,248.22, and the Nifty was down 1 point at 22,513.70. About 2134 shares advanced, 1353 shares declined, and 101 shares unchanged.

Kotak Mahindra, SBI Life Insurance, HDFC Bank, Bajaj Finserv and ITC were among the top gainers on the Nifty, while losers were UltraTech Cement, Grasim Industries, Bajaj Auto, Bajaj Finance and L&T.

Among sectors, bank, FMCG, realty up 0.5-1.5 percent, while Information Technology and Media down 0.4 percent each.

The BSE midcap and smallcap index rose 0.5 percent each.

DCM has received an order from Assessment Unit, Income Tax Department wherein an addition of Rs 25,89,48,981on account of unexplained expenditure has been made with accompanying notice of zero demand u/s 156 of the Act.

The public issue of Bharti Hexacom continued to get a solid response on April 5, the final day of bidding, as investors picked up 70.87 crore shares. This amounts to 17.18 times the issue of 4.12 crore shares that were up for grabs.

Qualified institutional buyers (QIBs) took the lead, buying 26.82 times the allotted quota. Non institutional investors or NIIs were second in line subscribing 7.86 times the portion set aside for them, followed by retail investors who picked 2.24 times the allotted quota.

Sensex Today | Nifty Information Technology index fell 0.5 percent dragged by Tech Mahindra, Persistent Systems, TCS

-Neutral call, target Rs 600 per share
-Pre-Q4 update: strong loan and deposit growth delivery
-Loan growth of 25 percent YoY and 9 percent QoQ
-Gross of loans securitised, its AUM grew by 28 percent YoY and 8 percent QoQ
-Deposits registered strong growth of 26 percent YoY & 9 percent QoQ
-Deposits growth led by strong sequential growth of 10 percent QoQ, 9 percent YoY in CASA deposits
-CASA ratio also improved 40 bp QoQ to 33.4 percent in Q4FY24

Indian Rupee gained by 11 paise as the RBI’s monetary policy remained the focus. RBI left repo-rate unchanged with a majority vote of 5-1. The central bank kept CPI and GDP projections for FY25 unchanged at 4.5% and 7% respectively. However, a strong US Dollar and weak tone in domestic markets capped sharp gains. US Dollar gained on hawkish comments from Fed officials. While Fed’s Austen Goolsbee anticipated two rate cuts, Neel Kashkari questioned if the central bank would cut interest rates if inflation remains sticky. However, weekly unemployment claims and trade deficit trailed forecast, capping the upside.

We expect Rupee to trade with a slight negative bias on risk aversion in global markets and a strong US Dollar. Surge in crude oil prices and FII outflows may also weigh on Rupee. Renewed geopolitical tensions in the Middle East may put downside pressure on risk assets. However, optimistic economic outlook by RBI Governor and any intervention by the central bank may support Rupee at lower levels. Investors may take cues from non-farm payrolls. USDINR spot price is expected to trade in a range of Rs 83.10 to Rs 83.60.

Sensex Today | BSE Smallcap index added 0.5 percent supported by Indraprastha Medical Corporation, Automotive Stampings and Assemblies, Nilkamal

-Buy call, target Rs 290 per share
-Loan growth improved to 18 percent YoY/11 percent QoQ
-Loan growth adjusted for short-term loan in base loans rose by 20 percent YoY
-Deposit growth was strong at 25 percent with rise in share of wholesale deposit
-LDR down >300 bps QoQ
-Collection efficiency has improved a bit to 99 percent
-Moderation in slippages, receipt of CGFMU guaranteed funds will be key triggers
-RBI's approval for Mr Ghosh's extension, term ends on July 9 will be key trigger

Sensex Today | BSE Midcap index rose 0.5 percent led by Indian Renewable Energy Development Agency, Indraprastha Gas, Supreme Industries

Redington has announced a strategic partnership with Zoho Corporation, a leading global technology company. This alliance aims to bring Zoho's industry-leading cloud solutions for office productivity, team collaboration, and customer engagement to a broader customer base in India by leveraging Redington's extensive network of partners.

-Buy call, target raised to Rs 1,350 per share
-Robust demand, reduction in input costs to drive sharp margin improvement for UCP segment
-Stable prices to drive sharp margin improvement for UCP segment
-Think margin improvement for UCP segment is likely to be positive surprise to investors

-Overweight call, target Rs 1,900 per share
-Deposit growth surprises positively in Q4 update
-Overall deposit growth accelerated to 7.5 percent, up 17 percent YoY, versus 2 percent QoQ
-Retail deposit growth was strong, up 7 percent QoQ, increase of Rs 13 lakh crore
-Gross loan growth moderated to 2 percent QoQ, versus 5 percent in the prior quarter
-Overall, see potential for good improvement in LCR QoQ

Oil prices look set for further upside in the short term as a more positive economic backdrop is joined by ongoing supply tightness and rising geopolitical risks. The news reports that Israeli embassies across the world have been placed on high alert due to increasing threats of an Iranian attack on Israeli diplomat. This has added to fresh risk premiums to prices. Brent and WTI Crude are up 4% for second straight weekly gains.

The overall expansion of manufacturing activities in March from US, China and Eurozone seems encouraging which have raised investors and trader confidence for higher demand of oil in coming quarters. The recent Ukrainian attacks on Russian oil refineries have roughly wiped 700kb of refining capacity, while global market is expected to be deficit of 0.7-0.9 mbpd in March.

We expect Brent to test the resistance of $92-$95 and WTI May contract faces the strong resistance of $90 in coming weeks. Buying the dip remain the trading strategy for the day.

Sensex Today | Nifty Bank index up 0.5 percent led by AU Small Finance Bank, Kotak Mahindra Bank, HDFC Bank

Sensex Today | Market at 3 PM

The Sensex was down 4.70 points or 0.01 percent at 74,222.93, and the Nifty was down 12.90 points or 0.06 percent at 22,501.80. About 2109 shares advanced, 1271 shares declined, and 88 shares unchanged.

-Buy call, target Rs 275 per share
-Pre-Q4 update: sharp growth uptick; MFI collections pick up
-Deposit growth strong at 15.1 percent QoQ/25.1 percent YoY led by strong growth in both retail & bulk deposits
-CASA growth also strong at 18 percent QoQ, and YoY
-Believe key for re-rating remains a consistent delivery on asset quality
-Will watch out for asset quality in Q4

The public issue of Bharti Hexacom continued to get a solid response on April 5, the final day of bidding, as investors picked up 42.39 crore shares. This amounts to 10.28 times the issue of 4.12 crore shares that were up for grabs.

Qualified institutional buyers (QIBs) took the lead, buying 15 times the allotted quota. Non institutional investors or NIIs were second in line subscribing 6.34 times the portion set aside for them, followed by retail investors who picked 2.03 times the allotted quota. Read More

RBM Infracon has received service order from Nayara Energy Limited worth Rs 22,19,70,015 for supply of ARC for Crude Tank (2 Nos.) M&I jobs at COT area (for ~1.75 years).

Amber Enterprises signed definitive agreements with AT Railway Sub Systems Private Limited, [the wholly owned subsidiary of Sidwal Refrigeration Industries Private Limited and Yujin Machinery Ltd., a South Korea Based Company & Sinkodia Pte. Ltd., a Singapore based company & Dujin International, a Hong Kong based company, for Investment and formation of a new Joint Venture Company (‘JVC’) In India, to carry on the business of manufacturing of all types of Driving Gears, Couplers, and Pantograph for various rolling stocks, including all types of wagons, trams, Vande Bharat trains, Indian Railways products, high speed and metro trains, regional rapid transit systems, etc, in India or such other places agreed between the parties.

Sensex Today | BSE Capital Goods index down 0.3 percent dragged by Finolex Cables, L&T, Praj Industries

-Outperform call, target Rs 2,000 per share
-Q4 business update shows consolidation strategy playing out well
-Surprising positively on deposit growth
-Decline in corporate loan growth and LDR are excellent outcomes
-Valuations remain attractive, time to add

The monetary policy review statement was on the expected lines when it comes to inflation and growth estimates. As long as inflation continues to trend downwards, the possibility of a cut in interest rates goes up. Though RBI will take a cue from the actions of the US Federal Reserve, it may not be as aggressive. The US Federal Reserve is expected to cut rates thrice this year. We expect a 50 basis points cut in repo rate this financial year.

The 10 years benchmark bond yield did not move much. The bond markets will take a cue from the g-sec auction. The issuance calendar for g-sec for April-September 2024 begins with the largest auction of securities worth Rs 38,000 crore. The bond market will take a cue from the outcome of the auction. Investors looking to play downward movement in long term yields should ideally accumulate units of exchange traded funds tracking Nifty 8-13 yr G-Sec index.

-Overweight call, target Rs 1,925 per share
-Loan growth in Q4 update improved & remains healthy on a YoY basis
-Deposit growth was 4 percent QoQ versus 3 percent last quarter
-Retail deposits growth moderated, partly owing to one-time outflow

Sensex Today | Market at 1 PM

The Sensex was down 65.23 points or 0.09 percent at 74,162.40, and the Nifty was down 22.80 points or 0.10 percent at 22,491.90. About 2082 shares advanced, 1241 shares declined, and 87 shares unchanged.

Coffee Day Enterprises defaults on payments of interest/repayment of principal amount on loans of Rs 433.91 crore from banks/financial institutions and unlisted debt securities for the quarter ended 31st March 2024.

-Buy call, target Rs 1,750 per share
-Deposit performance in Q4FY24 above street estimates of Rs 12-13 lakh crore
-Slowdown in loan growth, reduction in LDR By 600 bps were in-line with expectations
Current valuation of 13x FY26 EPS is still very attractive

As expected, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.50%. It has been 14 months since the rate was last raised. That said, over the last one year, the central bank did tighten monetary conditions by reducing liquidity.

With inflation trends mixed, the MPC is preferring to wait for clearer signs of easing towards its 4% target. Strong growth momentum in the economy has provided it space to do so.

While food inflation was above 8% in the most recent reading, non-food was way lower at 2.9%. Core inflation at 3.4% was well below RBI’s 4% target.

Monsoon this year could be better than last year, with the US National Oceanic and Atmospheric Administration (NOAA) expecting La Niña conditions to develop by June-August, which augurs well for the southwest monsoon. Last year El Niño and weak rains curtailed food output. This would be positive for rural demand as well as food inflation in the current fiscal.

The picture on monsoon will be clearer by the next MPC review meeting in June.

Easing food inflation and benign non-food inflation should bring headline inflation closer to the RBI’s target of 4%. That said, any weather disruptions and sustained uptick in crude oil prices will remain monitorable.

The transmission impact of rate hikes since May 2022 and regulatory measures on risky lending are still playing out. We expect growth and inflation in fiscal 2025 at 6.8% and 4.5%, respectively.

Overall, the macro environment is likely to turn favourable for a rate cut by mid-2024 in our base case, lest oil prices and monsoons play a spoilsport.

Sensex Today | BSE FMCG Index up 0.3 percent led by Andrew Yule, Venkys, M K Proteins

-International business reverted to clocking double-digit constant currency growth
-Consolidated revenue grew in low single digits
-Expect cons revenue growth to trend upwards
-Expect domestic revenue growth to outpace volume growth in the quarters ahead
-Consolidated revenue growth back in positive territory after 3 quarters
-Expect strong gross margin expansion on a year-on-year basis

-Total deposits up 15.7% at Rs 2.70 lakh crore versus Rs 2.34 lakh crore and CASA deposits up 14.2% at Rs 1.42 lakh crore versus Rs 1.24 lakh crore, YoY
-CASA ratio at 52.7% versus 53.3% YoY and versus 50.2%, QoQ
-Gross advances up 16.3% at Rs 2.03 lakh crore versus Rs 1.75 lakh crore, YoY

A Goldilocks policy meeting for Goldilocks economic conditions. Robust headline growth, capped inflationary pressures, and contained twin deficits on fiscal and current account called for the RBI to keep a steady hand on the policy rudder. It delivered this by maintaining status quo on policy rate, stance and annual forecasts of growth and inflation, along with the hawkish tilt in policy guidance, advising caution on inflation. However, in our view though, a subtle policy pivot has already occurred. While the stance remains at ‘withdrawal of accommodation’, it has typically been an unreliable guide in the past on future policy action. Typically, a divided MPC and more proactivity on liquidity (vs previous stealth tightening) are the first steps in the choreography of an eventual policy easing cycle.

The RBI policy on foreign exchange risk management has remained consistent over the last few years and there is no change in policy approach.
The point is it is only for hedging and underline exposure is a mandatory requirement.

HDFC Bank has sold 27,81,897 shares (representing 3.03% of the equity capital) of Indraprastha Medical Corporation during February 29, and April 4, 2024, through the secondary market route.

Post the stake sale, the bank holds 2.45% shares in Indraprastha.

The average selling price was Rs 199.38 per share and the total stake sale worth was Rs 55.46 crore.

RBI governor maintained status quo on interest rates at 6.5%. It’s been more than a year now that interest rates are stable at these elevated levels. Inflation has come down significantly from their 2022 highs of 7.79%. However, the elephant of inflation still remains above their comfort level of 4%. With global and domestic growth being robust, there isn’t much of a chance of cutting rates any time soon. It seems like central bankers across the world have been over promising and will under deliver when it comes to rate cuts in 2024.

With geo political tensions on the rise, chances of inflation remaining elevated in 2024 look certain. Rising cost of servicing public debt in advanced and emerging economies due to high interest rates might lead to a worsening debt situation. This might eventually lead to a cut in interest rates. Central bankers might be forced to cut rates to protect the financial system rather than stimulating growth.

Monetary policy was broadly on expected lines. Monetary policy committee (MPC) kept its stance same as withdrawal from accommodation. RBI highlighted that strong growth momentum is giving policy space to focus currently on inflation. RBI remained cautious against premature easing as RBI remain watchful on inflation due to volatile food inflation and higher crude prices but take comfort from benign core inflation trends. This is a balanced outcome for the equity market.

Review of LCR (Liquidity Coverage Ratio) framework for banks to have strong liquidity management would only strengthen the system. We remain positive on equity markets in the near-to-medium term with real estate, banks, consumer and engineering/capital goods as preferred sector.

Sensex Today | Market at 12 PM

The Sensex was down 25.90 points or 0.03 percent at 74,201.73, and the Nifty was down 13.90 points or 0.06 percent at 22,500.80. About 2050 shares advanced, 1227 shares declined, and 94 shares unchanged.

As expected, the RBI kept the Repo rate unchanged at 6.5% and maintained its stance focused on withdrawal of accommodation. Advanced estimate for Real GDP growth in FY23-24 stands at 7.6%.

With a strong GDP growth in the previous year, RBI remains steadfast in its goal to bring inflation down to the 4% target, which has eased to 5.1% in March. Projections of Real GDP growth for FY24-25 at 7% and CPI inflation at 4.5% for the year along with strong manufacturing & services PMI numbers and healthy corporate and banking balance sheet instills confidence of the resilience of Indian economy.

If rural demand strengthens and there are no adverse surprises in inflation from food or crude oil prices, private consumption is expected to rise, further aiding the growth trajectory. However, the timing and extent of rate cuts remain dependent on announcement by global central banks and the CPI aligning with RBI’s 4% target on a sustained basis.

-Underperform call, target Rs 930 per share
-Leadership changes done; competition tough
-With 37 percent of revenue from communications, company will find it tough to grow in-line with peers
-Company will find it tough to grow even 2 years out without significant M&A
-Employee costs have increased faster than peers, a structural challenge
-Peers pay out 70-120 percent of net income
-Company would likely need to push for more inorganic growth

The public issue of Bharti Hexacom continued to get a good response on April 5, the final day of bidding, as investors picked up 5.58 crore shares. This amounts to 1.35 times the issue of 4.12 crore shares that were up for grabs.

Non institutional investors or NIIs showed maximum interest and led from the front after subscribing 2.40 times the portion set aside for them, followed by retail investors who picked 1.40 times the allotted quota. Qualified institutional buyers (QIBs) were the only ones that were yet to fully subscribe to the issue. Read More

RBI MPC has kept the status quo on the interest rates and the monetary stance in the first meeting of FY25 and for the seventh consecutive time. Not surprisingly, RBI has continued to reaffirm its commitment to disinflation and price stability without providing any guidance on the timing of the monetary policy pivot. The central bank would continue to be watchful about the increased crude oil prices and any upward risks in food inflation in the near term, given the forecast of an intense upcoming summer season. The governor highlighted the significance of keeping the “elephant in the forest” (metaphor for high inflation) for a durable period.

The growth expectations for RBI continues to be strong with the GDP growth forecast for FY25 retained at 7.0%, reaffirming the strong momentum in domestic economic activity. The latest PMI data for March'24 has highlighted the optimism around both the manufacturing and the services sector. RBI also appears to be positive about the capex cycle and the likelihood of it getting more broad based in the new fiscal. Its assessment on global growth and trade also remains positive despite the persistent geo-political risks. Our outlook on the domestic growth prospects is relatively moderate with a forecast of 6.7% for FY25, given the muted private consumption growth as compared to gross fixed capital formation. On the inflation front, RBI has retained the CPI inflation forecast at 4.5% for the current fiscal; we have pegged it higher at 4.8% since there are potential risks to food and fuel inflation.

Given the tone of the MPC statement and the expectation of strong domestic growth, we believe that there is a low likelihood of any rate cut by RBI before Oct'25

Cello World's subsidiary Cello Consumerware has commissioned its manufacturing facility in phased manner in Rajasthan. Further, the glassware furnace, coming up in the same facility will be operational by the end of Q1 FY25.

For the seventh consecutive policy review, RBI has kept its key rates unchanged at 6.5%. There was no change in stance of ‘withdrawal of accommodation’, indicating that the RBI continues to remain focused on inflation and is aligning its commitment to ensure its descent to the target of 4 percent.

Though, the uncertainties around geopolitical risk, volatility around food prices and crude needs to be monitored as it continues to pose challenges and have an upside risks to inflation that may derail the path to disinflation.

-Neutral call, target Rs 1,625 per share
-Pre-Q4 Update: strong QoQ deposit accretion; soft loan growth
-Deposit growth strong at 7.5 percent QoQ, up 17 percent YoY in a generally seasonally strong Q4
-Gross loan growth, on a pro-forma basis was softer than estimate
-Gross loan growth was lower than banking system loan growth of 16 percent YoY

Sensex Today | BSE Bank index up 0.2 percent supported by HDFC Bank, AU Small Finance Bank, Kotak Mahindra Bank