Bulls remain hopeful of uptrend, Reserve Bank hints at rate cut

The Indian stock market struggled to maintain the momentum from the previous day, with key indices ending slightly lower. However, bulls remained optimistic about a continued upward trend. Global cues also support the prospects of a market rally. The dampened enthusiasm surrounding China's stimulus package is expected to reduce selling pressure from foreign investors. And, fears of the intensification of the Middle East conflict are receding.

In the derivatives market, the Gift Nifty closed at 25,188 on Wednesday night before climbing to 25,215 on Thursday morning, although it pulled back slightly. This suggests that Indian markets are likely to open on a positive note today.

Global market scenario

European markets rose by nearly one percent on Wednesday. US markets shattered records as technology stocks surged, brushing aside concerns of conflict.

The Dow Jones Industrial Average soared 431.63 points (1.03%) to close at a record high of 42,512.00. The S&P 500 gained 40.91 points (0.71%) to reach a new high of 5792.04, while the Nasdaq climbed 108.70 points (0.60%) to close at 18,291.62.

US futures, however, showed minor declines this morning, with the Dow down by 0.03%, the S&P 500 by 0.07%, and the Nasdaq by 0.12%.

US 10-year Treasury yields eased to 4.07%, adding to the positive sentiment.

Apart from China, most Asian markets continued their upward trend, with Japan’s Nikkei rising 0.60%. After a 10-day surge, Shanghai’s market dipped by 7.05%, while Hong Kong’s market, which had risen by 30% in two weeks, fell 1.7% on Wednesday.

Indian markets

In India, markets opened with enthusiasm on Wednesday, driven by monetary policy cues, but failed to hold onto gains. After a day of volatility, the major indices ended with modest losses, although midcap and smallcap stocks posted strong gains.

Sectors such as realty, pharma, healthcare, and auto performed well, while FMCG saw significant losses. ITC shares fell by 3%, and Hindustan Unilever dropped by 1.45%.

Foreign investors sold shares worth ₹4,562.71 crore on Wednesday, bringing their total sales over the past six trading sessions to ₹49,305.29 crore. Domestic institutions, however, purchased shares worth ₹3,508.61 crore.

On the NSE, 1,910 stocks advanced while 882 declined. On the BSE, 2,654 stocks gained, while 1,317 lost ground.

The Sensex dropped by 167.71 points (0.21%) to close at 81,467.10, while the Nifty shed 31.20 points (0.12%) to end at 24,981.95. The Bank Nifty, after significant fluctuations, closed 14.00 points (0.03%) lower at 51,007.00.

Meanwhile, the midcap index gained 0.97% to 59,102.65, and the smallcap index surged 1.33% to 18,864.60.

Despite the return of the bulls, selling pressure remains, as evidenced by Wednesday’s trade. Only if Nifty crosses the 25,300-25,350 range will the market shift decisively in favour of the bulls. Today, the Nifty has support at 24,945 and 24,875, with resistance at 25,165 and 25,235.

RBI hints at rate cut 

Reserve Bank Governor Shaktikanta Das offered no surprises in the latest monetary policy announcement, maintaining the repo rate at 6.5%. This signals that banks are unlikely to alter their interest rates. However, the shift to a neutral stance hints that a repo rate cut could be on the horizon.

The RBI retained its GDP growth forecast for the current fiscal year at 7.2%. The growth for the first quarter stood at 6.7%, and the central bank now expects the second-quarter growth (ending September) to be around 7%, down from the earlier estimate of 7.2%. For the third quarter, the forecast has been revised upwards from 7.3% to 7.4%, with the same 7.4% expected for the fourth quarter, up from 7.2%. The RBI expects growth in the first quarter of the next fiscal year to reach 7.3%.

Inflation expectations for the fiscal year have been maintained at 4.5%, with second-quarter inflation forecast at 4.1%. Third-quarter inflation has been slightly raised from 4.7% to 4.8%, while fourth-quarter inflation is expected to ease from 4.3% to 4.2%.

Gold continues to dip

Gold prices dipped again on Wednesday, closing at $2,608.70 per ounce, and rising slightly to $2,610 on Thursday morning. The US Federal Reserve's minutes suggested that rate cuts will proceed cautiously, and the strengthening of the dollar has also weighed on gold prices. Since October 1, when gold traded at $2,660.49, it has fallen by 1.95%.

In Kerala, gold prices dropped by ₹560 per sovereign to ₹56,240 on Wednesday, with further declines expected today. Silver also dipped, with prices falling to $30.45 per ounce.

The slower pace of rate cuts boosted the dollar, with the dollar index closing at 102.93 on Wednesday, before easing to 102.89 this morning.

The Indian rupee ended flat on Wednesday, with the dollar closing at ₹83.96.

Crude oil edges down

Crude oil prices softened slightly on Wednesday, with Brent crude closing at $76.58 per barrel, though it edged up to $77.02 this morning. WTI crude settled at $73.67, while UAE’s Murban crude was at $77.08 per barrel. Concerns over Hurricane Milton affecting oil drilling and refineries in Florida have contributed to the upward pressure on prices.

Cryptocurrencies fell as well, with Bitcoin dropping below $60,600 and Ethereum below $2,370, primarily due to the strengthening dollar and delayed interest rate cuts.

Industrial metals continued to slide, following warnings of slower Chinese growth. Copper fell by 0.68% to $9,529.66 per tonne, aluminium dropped by 1.1% to $2,540.92, while lead, zinc, nickel, and tin also saw declines ranging from 0.86% to 2.66%.

Market indicators

Market indicators

         Sensex 30: 81,467.10 (-0.21%)

• Nifty 50: 24,981.95 (-0.12%)
• Bank Nifty: 51,007.00 (-0.03%)
• Mid-cap 100: 59,102.65 (+0.97%)
• Small-cap 100: 18,864.60 (+1.33%)
• Dow Jones 30: 42,512.00 (+1.03%)
• S&P 500: 5,792.04 (+0.71%)
• Nasdaq: 18,291.62 (+0.60%)
• Dollar ($): ₹83.96 (₹0.00)
• Dollar index: 102.93 (+0.38)
• Gold (ounce): $2,608.70 (-$13.50)
• Gold (sovereign): ₹56,240 (-₹560)
• Crude (Brent): $76.58 (-$0.60)