Rising prices and Reliance woes: Bulls face challenges amid oil dip

Despite booming foreign markets, the Indian market opens today amidst negative news. Reliance Industries has reported lower net profits and higher-than-expected retail inflation is likely to weigh on market sentiment. However, bulls remain optimistic after regaining their footing yesterday, bolstered by a decline in crude oil prices.

Analysts did not anticipate a 5.5 percent hike in retail price inflation, although an increase was expected. September’s inflation rate reached its highest level in nine months, rising to 5.5 percent from 3.7 percent in August, primarily driven by a 9.2 percent increase in food prices—up from 5.7 percent in August. Notable surges include potatoes rising by 78.1 percent, onions by 78.8%, and vegetables by 48.7%. The rise in wholesale prices indicates that retail inflation may remain high in October.

Reliance Industries’ second-quarter results showed no increase in revenue and a decline in profit, particularly in the oil-to-chemicals sector. Retail revenue remained stagnant, although profits in the digital services segment grew by 15 percent. Analysts do not expect significant changes in the upcoming quarter, which may keep the stock price low.

Car manufacturers are concerned about declining sales this fiscal year, with dealers hesitating to purchase new vehicles. Sales of two-wheelers and three-wheelers also remain sluggish.

In the derivatives market, the Gift Nifty closed at 25,271 on Monday night but dropped to 25,232 this morning, indicating a cautious start for the Indian market today.

Global market outlook

European markets ended positively on Monday, ahead of the European Central Bank's monetary policy review scheduled for Thursday, which is expected to announce the third rate cut of the year. There are expectations of a slight reduction in interest rates to three percent by December.

US markets rallied yesterday, with the Dow Jones and S&P 500 hitting record highs, and the Dow crossing 43,000 for the first time. UBS estimates that the S&P index could exceed 6200 by mid-next year, while Nvidia shares reached record highs, closely following Apple in market valuation.

The Dow Jones Industrial Average rose by 201.36 points (0.47%) to close at 43,065.22, while the S&P gained 44.82 points (0.77%) to finish at 5859.85. The Nasdaq index rose by 159.75 points (0.87%) to close at 18,502.69. US futures are also up this morning, with the Dow rising by 0.14%, the S&P by 0.09%, and the Nasdaq by 0.07%.

Asian markets are also experiencing gains today, with the Japanese market up one percent.

Indian markets

On Monday, the Indian market closed higher after a modest opening. Bank, finance, IT, and realty stocks were the main contributors to this rise. Wipro, Tech Mahindra, and HDFC Life were notable gainers, while ONGC, Maruti, and Tata Steel weighed down the market.

Wipro surged 4.24 percent due to expectations of a bonus issue, and Federal Bank shares rose 5.31 percent, closing at ₹197.50, following a buy recommendation from Motilal Oswal with a target price of ₹230. Conversely, Tata Chemicals shares fell 7.11 percent, and Bandhan Bank, which had seen significant gains previously, dropped 4.78 percent despite buy ratings from brokerages.

Shares of Avenue Supermart, which operates the D-Mart retail chain, fell 8.5 percent after disappointing second-quarter business and profit growth, prompting analysts to downgrade the stock. Reliance's move to potentially acquire Karan Johar's Dharma Productions has also negatively impacted Sarigama India's shares, which fell by 6.38 percent.

Slight rise for midcap, smallcap stocks 

On Monday, foreign investors sold a net ₹3731.59 crore in the cash market, bringing their total sales for the month to ₹62,126.15 crore. Meanwhile, domestic funds and institutions made net purchases of ₹2278.09 crore.

Market breadth showed 1433 shares gaining while 1382 shares fell on the NSE. On the BSE, 2044 stocks rose and 2011 fell.

The Sensex gained 561.69 points (0.73%) to close at 81,973.05, while the Nifty closed up 163.70 points (0.66%) at 25,127.95. The Bank Nifty surged 644.60 points (1.26%) to finish at 51,816.90. The midcap index rose by 0.43% to close at 59,465.45, and the smallcap index also increased by 0.43%, finishing at 19,090.55.

The bulls seem to have returned, having crossed the initial resistance zone. The market is expected to break through the 25,200-25,300 resistance levels in the coming days, with potential pressure zones at 25,500-25,600. Today's Nifty support levels are at 25,050 and 24,010, while resistance is anticipated at 25,160 and 25,190.

Commodity update

Gold prices have dipped as the dollar strengthens, closing at $2,649.70 an ounce on Monday, down by eight dollars. It climbed to $2650 this morning. In Kerala, gold prices remain at a record high of ₹56,960. Silver prices have risen to $31.23 an ounce.

The dollar has strengthened on expectations that interest rate cuts will be gradual, with the dollar index closing at 103.30 on Monday before dropping to 103.20 this morning. The Indian rupee attempted to strengthen on Monday but ultimately fell, closing at ₹84.06 against the dollar. A further decline may be expected today.

Crude oil prices have decreased by over five percent, with Brent crude closing at $75.34 on Monday and climbing to $75.45 this morning. WTI crude is at $71.76, while UAE’s Murban crude stands at $75.37.

Cryptocurrencies have seen a rebound, with Bitcoin rising 5.5 percent to over $66,100 and Ether jumping 7.3 percent to $2,635.

Industrial metals experienced a slight decline on Monday, following China's stimulus announcement which fell short of expectations. Copper dropped 0.73% to $9,526.31 per tonne, while aluminum fell 1.47% to $2,593.85 per tonne. Other metals showed mixed performance, with lead down 1.31%, nickel down 1.60%, tin down 1.96%, and zinc down 1.42%.

Market indicators

- Sensex 30: 81,973.05 (+0.73%)
- Nifty50: 25,127.95 (+0.66%)
- Bank Nifty: 51,816.90 (+1.26%)
- Midcap 100: 59,465.45 (+0.43%)
- Small-cap 100: 19,090.55 (+0.43%)
- Dow Jones 30: 43,065.20 (+0.47%)
- S&P 500: 5,859.85 (+0.77%)
- Nasdaq: 18,502.70 (+0.87%)
- Dollar ($): ₹84.06 (+₹0.00)
- Dollar Index: 103.30 (+0.41)
- Gold (oz): $2,649.70 (-$8.00)
- Gold (Pavan): ₹56,960 (+₹0)
- Crude (Brent): $75.34 (-$3.70)