Share Market Highlights 4th April 2024: Sensex, Nifty volatile; analysts eye RBI policy for direction

Indian benchmark indices, Sensex and Nifty, opened firmly on global cues. The 30-share BSE Sensex climbed 411.02 points to 74,287.84 in early trade. The NSE Nifty gained 143.25 points to 22,577.90. Analysts expect the consolidation phase to continue due to the lack of triggers. The focus is on the RBI monetary policy outcome on Friday, especially the central bank’s comments. 

On Wednesday, the Reserve Bank’s rate-setting panel started its three-day deliberations on the next monetary policy set amid expectations that the central bank would once again keep the key interest rate unchanged and focus more on inflation control as concerns over economic growth are decreasing, said Emkay Global Financial.

“We think the RBI’s tone will slowly tiptoe to ‘Gracklish’ from the usual ‘Hawk-Dove’ signaling, implying a non-committal stance and limited definite forward guidance ahead. The fluidity of global narratives and policy repricing, in conjunction with the near-term problem-of-plenty on INR/bonds, could make it arduous for the RBI to find a balance in its policy biases,” the domestic broking firm said.

Meanwhile, Nifty futures at Gift Nifty are ruling at 22,600 against the Nifty April futures price of 22,542, signalling a gap-up opening of 50-60 points.

While the upcoming policy may not see material changes in the RBI’s macro assessment, issues like the case and timing of a policy pivot/stance change, factors influencing liquidity management ahead, and, of course, assessing which part of the yield curve has the maximum juice, etc., would be key for markets.

“While bull-steepening looks to be a popular trade, consistent repricing of Fed cuts could spill over into the RBI’s reaction function and will be cyclically noisy for bonds/FX,” it added.

Meanwhile, Asian equity indices are trading in the green zone, though Chinese, Thai, and Taiwanese markets are shut today due to a holiday. US stocks ended mixed overnight amidst uncertainty over interest rates, especially ahead of key labour market data and Federal Reserve comments.

Ashwin Ramani, Derivatives & Technical Analyst, Samco Securities, said: Nifty shrugged off its initial weakness and rose steadily, making an Intraday high of 22,521 before profit booking dragged the Index down, closing 19 points lower at 22,435.

The India VIX, known as the fear indicator, fell 2.40 per cent on an Intraday basis and closed at 11.37. It fell for the third consecutive day, comforting the bulls.

“Strong put writing was observed at the 22,400 Strike in Nifty. This led to the steady up move in the Index on Intraday basis. However, Nifty failed to close above the 22,500 level for the fourth consecutive day. Nifty is unlikely to move up unless call writers exit from the 22,500 Strike in Nifty,” he said.

After registering a new high of 22530, Nifty has been consolidating in a range since the last three sessions, said Ruchit Jain, Lead Research at The correction in the global bourses, rising crude oil prices, rise in bond yields, and the RBI policy announcement towards the end of this week may have led to some uncertainty and, hence, a consolidation.

“However, the index has not breached any support and in fact the broader markets have been doing well due to which the market breadth remains positive,” he further said.

According to Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy, the weekly open interest build-up and max pain data suggest a period of reduced volatility in the Nifty over the next few days.

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