The domestic market is poised for a promising start on Thursday, buoyed by robust IIP numbers and healthy data. The Gift Nifty at 23,465 signals a potential gain of about 100 points, as Nifty futures closed at 23,355 on the NSE, instilling optimism for a positive opening.
Nish Bhatt, Founder & CEO of Millwood Kane International on CPI & IIP Data, said:India’s CPI inflation in May 2024 eased to a 12-month low of 4.75 per cent, though slightly higher than the 4.31 per cent recorded in the year-ago month of May 2023. India’s industrial production grew 5 per cent in April, riding on robust growth of 6.7 percent in mining and 10.2 percent in electricity, over the corresponding month in the previous year. With the government in place and the election anxiety subsiding, the favorable monsoon forecast and probable increase in Kharif output should help contain inflation, instilling confidence in the market.
Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers, said the retail inflation rate for May 2024 was lower than expected, both in core and non-core components. Despite this, inflation remains significantly above the RBI’s target, making a rate cut in the next six months unlikely. The strong GDP growth from last year and the anticipated robust growth for the current year support this stance. Additionally, the higher-than-expected industrial production in April 2024 reinforces this view. However, high real policy rates are dampening private investment.
“With developed countries and the US expected to start rate cuts in the next three months, the RBI will face increased pressure to adopt a more accommodative policy. Already, two of the six members of the Monetary Policy Committee have shown support for softening the monetary policy. Overall, it will be challenging for the RBI to maintain its current pause and liquidity-tightening stance for long. The combination of falling inflation and robust growth in India is positive for the equity market,” he said.
Meanwhile, the US Reserve maintained its key interest rate on Wednesday and indicated that only one rate cut is anticipated before the year’s end. As against the previous three cuts, the Fed’s forecast of just one rate cut was because inflation remains persistently elevated despite having cooled in the past two months.
However, equities across the Asia-Pacific region are up moderately one early trade on Thursday.
Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd., said that profit booking is possible as long as the index remains below 23,500. “Overall, we expect the index to consolidate in the 23,000–23,500 range in the short term. If the index remains above 23,500, the rally may extend to 23,700-23,800 levels. On the downside, immediate support for the Nifty is placed near 23,000, followed by 22,680, where the 34-Day Exponential Moving Average (DEMA) support is placed.”
According to Shrikant Chouhan, Head of Equity Research, Kotak Securities, Technically, the index witnessed sluggish activity after a quiet opening. Short-term texture suggests 23400/77000 would be the key resistance zone for short-term traders, while 23200/76300 would act as a crucial support zone. “We believe the market could rally towards 23500-23600/77300-77600 after a breakout of 23400/77000. On the other hand, below 23200/76300 the index could retest 23050-23000/76000-75800 levels.”
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, said: The India VIX closed 2.56 per cent lower on an Intraday basis and settled at 14.39. The VIX reached a high of 31.71 on 4th June and has cooled off since then. The FPI (Foreign Portfolio Investors) long short ratio jumped further to 37 per cent on 11th June from 34 per cent on 10th June as the FPIs continued to build significant long positions and cover short positions in Index futures.