Stock market today: Indian benchmark indices traded mixed on Wednesday, August 5, ahead of the Reserve Bank of India’s (RBI) monetary policy decision, as investors largely priced in an unchanged interest rate while awaiting the central bank’s commentary on inflation and growth.
At 9:37 IST, the Nifty 50 was marginally lower by 0.02% at 24,610.20, while the BSE Sensex gained 0.44% to 78,775.
The two benchmark indices continued to show divergent moves following the introduction of the new auction mechanism for stocks with futures and options (F&O) contracts. Market breadth remained positive, with 10 of the 16 major sectoral indices trading in the green. The broader market outperformed, as the Nifty Midcap and Smallcap indices advanced 0.8% and 0.6%, respectively, to fresh record highs.
According to a Reuters poll, the RBI is widely expected to keep the repo rate unchanged, while Governor Sanjay Malhotra is likely to maintain a slightly hawkish tone amid inflation risks stemming from volatile crude oil prices and a weaker-than-normal monsoon. The policy decision is scheduled to be announced at 10:00 IST.
Since the RBI paused its rate-cut cycle on June 5, the Nifty 50 has rallied 5.1%, narrowing its year-to-date decline to 5.8%, supported by measures to stabilise the rupee and improve foreign capital inflows, according to Reuters.
Market Outlook by Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities
Nifty 50
Nifty 50 closed in the negative territory losing approximately 150 points on a closing basis, however, due to CAS adjustment it shows minus else it would have been flat as the closing so the overall trend is positive and until this CAS mechanism is not resolved the indicative price should be futures to understand the trend and that closed negative with more than 100 points loss hence it was a negative day so the Index snaps 6 days winning streak and with this now 24,700 becomes an immediate hurdle whereas 24,200 is the support so the short term range is 24,700-24,200 and only beyond this range there will be a further price action until then some consolidation is expected in the Index.
As far as BankNifty is concerned, the range for consolidation is 58,500-56,000, i.e. of 2,500 points, and only beyond this range a breakout will be confirmed. Till then the short-term view is sideways to positive hence buy on dips near the lower end of the range.
Stocks To Buy in the near-term – Jay Thakkar
Jay Thakkar of ICICI Securities recommends Supreme Industries Futures, L&T Finance Futures, and Shriram Finance Futures.
Buy Supreme Inds Fut in the range of 3,500-3,520 stop loss 3,420 Targets 3,650-3,720
The stock has provided a breakout from the sideways consolidation as well as from the downtrend line breakout which is a positive sign for the stock as it indicates a trend reversal which is also confirmed by the fall in open interest indicating short covering. So, further short covering is expected in this stock which can take the prices to 3650 and above levels. As per the options data, there has been significant put additions at the lower levels from 3300-3500 strikes and with that the highest call base is at 3700 levels so there is no major hurdle until then, hence the risk: reward is on the positive side.
Buy LTF Fut in the range of 320-324 stop loss below 309 Target 335-345
LTF has been trending higher and with that there has been long additions as well indicating that the overall trend is positive. Since past few days there has been some unwinding in long positions and with that the stock has seen some consolidation but it seems to have taken some support at the lower levels as well, so the upside probability is higher. As per the options data, there has been significant put additions at the lower end at 280 and 300 strikes which will act as a support whereas 350 strike has the highest call base so the second target is at 345.
Buy Shriram Finance fut in the range of 1,070-1,090 stop loss below 1,045 Targets 1,140-1,180
The stock has provided a breakout from the sideways consolidation and the open interest in the futures segment is at the lower levels indicating that the leverage is low and the upside potential is high. As per the options data, the strikes from 1040 to 1100 have the highest call base which is a concern for the upside but once the 1100 levels are taken off there will be call unwinding which will lead the stock price to inch higher as the stock is trading above its max pain it will act as a short-term support.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
