Indian Stock Market Review And Outlook For Sep 10, 2024

As discussed yesterday, the Indian market opened gap down with NIFTY index slide over 80 points during the early part of the day but managed to recover during the later phase with the support pf FMCG and Banks. In NIFTY today, the overall breadth of the market turned neutral from bearish during the morning part. FMCG lead the rally in indices with HUL, ITC and Britannia gained 2.85 per cent, 1.95 per cent and 1.74 per cent respectively. In Banking ICICI Bank and Axis bank added 2.09 per cent and 1 per cent respectively. Major dragger for the index was ONGC with shares sliding 2.91 per cent. In tech stocks Tech Mahindra slide the most losing 2.48 per cent tracking decline in US tech stocks. However, tech heavy TCS and Infosys ended almost flat since Friday’s close.

The theme of the market is sideways to bullish, however need clarity from the US CPI data going to be released this week. As per consensus estimates, US CPI should read lower at 2.6 per cent from a reading of 2.9 per cent, the previous month. The CPI data is key to the global market as Fed believe to take cues from the Phillips Curve. A lower reading of CPI and recent weak Jobs data from the US may push for sharper rate cut by the US Federal Reserve bank. The Federal Open Market Committee is scheduled to meet on September 17-18, 2024 for further monetary policy decisions. The market expects a 50 bp rate cut by the US Fed and this may push the Reserve Bank of India to start rate cut which are still at peak levels.

The theme for the next 10-15 days is the US policy action and local festive demand. The 3^rd quarter is very important for the economy as consumption is at peak during festive season and also added factor is the recovery of the rural economy with better kharif output projection. As we discussed yesterday, I am bullish on FMCG sector and also on consumer durable and consumer durable finance. However, the whole supply chain related to this sector may be impacted positively.

Another important part is the focus on Indian IT sector from Funds and Portfolio managers ahead of rates from the US. I continue to maintain bullish stand on Indian IT majors with few mid-sized stocks as global interest rates are expected to come down reducing the cost of funds.

Industrial commodities are expected to see recovery from possible rate cuts and one should look at commodity-based stocks for 3-4 month perspective at least.

For derivative traders in indices, it has become difficult to give trades ahead of the market due to sharp intraday swings. Still one should consider the price levels and perspective. As NIFTY index managed to recover and closed above its 20 EMA, may see a moderate positive momentum. However, any recovery may find strong resistance around 25050-25080 levels and failing to sustain near resistance may bring in selling momentum. The immediate support is placed at 24801 levels followed by 24755. For BANK NIFTY, the closing is a bullish piercing pattern however may find strong resistance at 51400-500 range. Immediate support for BNF is around 50800 levels.  The NIFTY midcap select index closed lower on its expiry day, however still above the 20 days EMA. The immediate range for the index is 13040-12960 and either side breakout may give moderate momentum for traders.

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