The Indian equity markets have continued their upward trajectory, with the Sensex increasing by over 140 points and the Nifty trading above the 22,500 mark. On October 6, both indices opened positively, despite starting the day on a flat note. The Sensex commenced at 61,935.45 and was recorded at approximately 61,936.78, which is an increase of 148.26 points or 0.24 per cent from its last closing figure of 61,788.52.

Similarly, the Nifty opened at 22,603.25 compared to its former closing of 22,555.75, rising to around 22,591.60, marking an upturn of 35.85 points or 0.16 per cent. Broader market indices showed a majority in positive territory during this trading session. However, the performance across various sectors was mixed, with indices for Auto, FMCG, IT, Pharma, Realty, Healthcare, and Consumer Durables reporting declines.

Bank stocks witnessed significant gains during the initial trading hours, spurred by the anticipation of the Reserve Bank of India’s Monetary Policy Committee meeting slated for the following day. This rally in banking securities played a crucial role in driving the overall market recovery.

Key Sector Movements

Prominent gainers in the market included stocks such as Trent, Kotak Bank, BSE, Axis Bank, Hindalco, Reliance, HCL Tech, Hindustan Unilever, SBI Life, IndiGo, and JSW Steel. On the opposite end, key laggards included Apollo Hospital, Max Health, Cipla, Maruti, BEL, TMPV, Bajaj Finserv, and ITC.

In the Bombay Stock Exchange (BSE), gains were notably observed in Kotak Bank, IndusInd Bank, Axis Bank, Punjab National Bank, and Union Bank. Conversely, stocks like Yes Bank, ICICI Bank, State Bank of India, and HDFC Bank exhibited lower performance. The mixed results across sectors indicate varied investor sentiments and market conditions.

Market analysts suggest that maintaining this upward momentum may be challenging in the face of external economic pressures. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, expressed that foreign institutional investors may continue to sell amid rising US bond yields, which could lead to a ‘sell on rally’ approach in the market.

Outlook Ahead of RBI MPC Meeting

The upcoming announcement from the Reserve Bank of India regarding its monetary policy is expected to significantly influence market dynamics. Vijayakumar mentioned that a rate hike appears likely due to rising inflationary pressures and increasing bond yields in various developed economies. He highlighted that a 25 basis point increase has likely been factored into the market.

Moreover, the performance of the banking sector may benefit from a rate hike, as higher floating rates could enhance their margins. Positive indicators such as robust deposit and credit growth underscore favourable prospects for financial institutions in the current economic climate.

Market analyst Vipin Dixena noted that external factors such as softer crude prices and improved global cues are contributing to market recovery. Brent crude is trading at about USD 100.51 per barrel, while other crude oil prices are around USD 89.67 per barrel. Technical analysis suggests that the Nifty has critical support around the 22,400 to 22,200 range, with barriers identified at 22,800 and further hurdles at 23,000 to 23,200.

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