Markets close higher on short covering - Alex Mathews

The markets had opened on a positive note tracking gains made in the US as well as Asian markets and thereafter traded in a sideways manner till the RBI policy result announcement. Later in the second part of the day we saw markets scaling towards 11 and half week high on the back of short covering as it was the day of October F&O expiry and ahead of the Muhurat trading on the Diwali day. All eyes were on RBI, which hiked the Repo rate by 25 bps to 8.5% and the Reverse Repo rate stands adjusted at 7.5%, which was on expected lines. Along with that the RBI deregulated the saving bank deposit interest rate with immediate effect giving the banks full power to decide the saving bank interest rate.

We saw many banks losing as RBI have deregulated saving bank interest rates. But one thing the market found within the lines was that it may push the pause button for interest rates. RBI Governor said that the food inflation remains at uncomfortable levels and the rate hikes are hurting the growth of the country but RBI held its hand around its previous inflation projection of 7% by the end of this fiscal. The market breadth, indicating the overall health of the market, was negative. On BSE, 1,432 shares fell and 1,285 rose. Being the day of the expiry, the rollover figures at the end of trading was around 70% when compared to just 58.4% rollover registered in the month of September.

Nifty, on the day of expiry, gained considerably in the last half of the day backed by short covering and at one point in time moved above 5200 but eventually closed below it. For Nifty the major resistance is there at 5245 and 5265 levels while the support is there at 5150 and 5114 levels.

On the sectoral front, we saw buying in auto, IT, oil, and technology and metal stocks while selling was seen in capital goods, banking and PSU stocks. Same was the case of realty sectors which too caught in the middle of bear run while auto sector gained on expectation of sales this festival. IT stocks gained on improved outlook of Europe and US economies.

Source : Equity Bulls

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