Stock Market Soars to New Heights Driven by Anticipation of RBI Rate Cut

Benchmark indices hit new highs with BSE Sensex closing at 84,928.61 and NSE Nifty at 25,939.05. Gains were driven by sectors like auto, oil, and financial services. Investors await the RBI's Monetary Policy Committee meeting amid expectations of rate cuts.

In a significant boost to the financial market, the stock market closed in the green on Monday, with benchmark indices hitting all-time highs. The BSE Sensex surged by 384.30 points to end at 84,928.61, while the NSE Nifty gained 148.10 points, closing at 25,939.05. The rally was particularly fueled by strong buying in sectors such as auto, oil and gas, and financial services.

Among the Nifty 50 companies, 34 stocks advanced, and 16 declined. Leading the pack of gainers were Bajaj Auto, Mahindra & Mahindra (M&M), ONGC, Hero Motocorp, and SBI Life. On the losing side, Eicher Motors, ICICI Bank, Divi's Labs, Wipro, and IndusInd Bank saw declines due to profit booking after recent gains.

The bullish momentum was fueled by anticipation ahead of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting, set for October 7 to 9. Speculation over potential repo rate cuts further spiked India VIX, a volatility index, by more than 9 percent, indicating investor caution. VLA Ambala, Co-Founder of Stock Market Today, commented on the session's performance, attributing it to macroeconomic factors and anticipation of the RBI's repo rate decision.

Ambala stated, "In today's session, the India VIX rose more than 9 percent as the market awaits the MPC policy and REPO rate cut decision. The composite PMI for September also showed the slowest growth rate for 2024 in manufacturing and services sectors." She emphasized that the RBI needs to match the US Fed rate to maintain global competitiveness, noting that a repo rate cut could inject liquidity, fueling a bullish market trend and benefiting sectors like real estate.

"If the RBI chooses a REPO rate cut, it will inject more liquidity into the economy, potentially driving a bullish trend in the market. Banking and NBFC sectors are responding to potential rate adjustments, and we might see a decline of 100-200 basis points over the next 1.5 years. The market has shown resilience and will likely adapt quickly to these changes," Ambala added.

Major indices such as Nifty, Bank Nifty, Financial Services, and Mid Cap indices are trading at new highs. Sectors like NBFCs, Realty, and Infrastructure are expected to remain in focus. Technical indicators reveal a bullish broader trend, with the Relative Strength Index (RSI) for Nifty standing strong across daily, weekly, and monthly timeframes. However, Ambala advised investors to exercise caution, noting that support levels for Nifty are at 25,870 and 25,680, with resistance at 26,050 and 26,130 for the upcoming session.

(With inputs from agencies.)