Weekly market wrap: Indian benchmarks ends week lower as RBI holds rates

Weekly market wrap: The Indian equity market concluded the week on a downward trajectory, with benchmark indices Nifty50 and Sensex experiencing declines of 0.3 per cent and 0.7 per cent respectively, settling at 21,783 and 71,596 levels. Despite this, broader markets showcased resilience as BSE Midcap gained 1.6 per cent while BSE Smallcap registered a marginal decline of 0.4 per cent throughout the week.

A significant event during the week was the Reserve Bank of India's (RBI) Monetary Policy Meeting (MPC), where the central bank opted to maintain key interest rates unchanged, retaining a status quo stance. Although the FY25 real GDP growth forecast was revised upward to 7.0 per cent from 6.6 per cent, concerns lingered regarding inflation and banking liquidity. While the RBI policy had a neutral to positive impact on the market, profit booking ensued as investors exercised caution.

In terms of economic data, India's Services Purchasing Managers' Index (PMI) for January 2024 stood at 61.8, driven by heightened demand and increased new orders, signaling robust sectoral growth.

On the liquidity front, Foreign Institutional Investors (FIIs) turned net sellers in the cash market with a selling amounting to Rs 5,551 crore, whereas Domestic Institutional Investors (DIIs) remained net buyers, contributing Rs 5,748 crore until the 8th of February.

Looking ahead, the Indian market is expected to track ongoing corporate earnings releases, prompting stock-specific movements. Meanwhile, in the US, market participants will closely monitor data releases such as the Consumer Price Index (CPI), initial jobless claims, retail sales, and the Producer Price Index (PPI) to gauge the Federal Reserve's future interest rate trajectory. Additionally, India's forthcoming inflation data will be crucial for market sentiment.

Providing insights into specific stock performances, SBI Securities highlighted key financial updates from various companies. Notably, Ashok Leyland, BSE, Varun Beverages, JB Chemicals & Pharmaceuticals, Star Cement, Lupin, FDC, Power Grid Corp, Cummins India, and United Breweries reported varied growth in sales, EBITDA, and PAT for the respective quarters.

Despite market challenges, certain sectors like telecommunications received positive news, with the Union Cabinet's approval for a spectrum auction expected to benefit industry players. Additionally, the RBI's decision to maintain the repo rate at 6.5 per cent was accompanied by an upgraded GDP growth forecast for FY25.

Analysts caution investors to remain vigilant amidst the evolving market dynamics. The Nifty50 index's crucial support is projected in the range of 21,650-21,600, with a further decline potentially testing the 21,350 level, according to SBI Securities. Conversely, resistance is expected around 21,950-22,000.