After The Bell: Focus on RBI policy, what should investors do on Wednesday?

After The Bell: Focus on RBI policy, what should investors do on Wednesday?
April 06
19:02 2021
Source: Reuters

Source: Reuters

Benchmark indices found some stability on April 6 after falling more than a percent in the previous trading session, with the Sensex rising 42 points to 49,201 and the Nifty50 closing 45 points higher at 14,683.

Sectorally, buying was seen in healthcare, industrials, and infrastructure stocks, while selling was visible in banks, public sector, consumer durables, and energy stocks.

The Nifty found some stability above 14,600 on positive global cues supported by strong economic data from China and the US. All eyes are now on the outcome of the Reserve Bank of India’s monetary policy committee (MPC) to be shared on April 7.

The RBI MPC, as widely expected and as indicated by the central bank in its previous meets, is likely to maintain the status quo to keep the system adequately liquidated and help the economy sustain its growth trajectory as the second wave of coronavirus infections hits hard.

Also Read: RBI MPC | Status quo on rates, stance to continue; RBI, market need to be in sync on policy normalisation

“The market is attempting a strong pullback from Monday’s low as the announced lockdown is unlikely to really dampen the economic growth trajectory. There is a great hope that economic restrictions, summer season and vaccination will lead to a fall in COVID cases,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“The pullback is also supported by a strong rally happening in global markets. The domestic market was awaiting the RBI policy with an expectation to maintain the status quo, future commentary on growth and inflation will be highly viewed with an optimistic outlook on FY22,” he said.

Here is what experts suggest investors should do on April 7:

Ashis Biswas, Head of Technical Research, CapitalVia Global Research Limited

The Nifty failed to show resilience to stay above 14,800. Technical factors suggest a short-term consolidation in the near future followed by an attempt to breakout above the 14,900 some times in the middle of the month.

As the immediate support is visible at 14,440, we expect any corrective wave-down to find support at around 14,400-14,450.

Traders are advised to refrain from building a fresh buying position until the market witnesses a correction to the 14,450 or a breaks out above 14,900.

Binod Modi, Head Strategy, Reliance Securities

We continue to believe that a near-term possible correction in the market would be creating an opportunity for bargain trading for investors.

A strong pick-up in capital expenditures in FY22E, the impact of new reforms announced in the Budget to stimulate consumption activities and allocation for higher capital expenditures for FY22E should continue to support an ongoing rebound in corporate earnings.

Investors must focus on quality stocks with robust earnings visibility and margins of safety.

Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services Limited

The Nifty formed an Inside Bar and a Bearish candle along with a long shadow on the daily scale. It has to hold above 14,700 to witness an up move towards 14,850 and 15,000, while on the downside, support exists at 14,550 and 14,450 levels.

India VIX fell by 1.79 percent from 21.21 to 20.84 levels. Volatility has to cool down below 20 zones to witness some buying interest in the market.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

The Nifty continued to trade near the key daily and hourly moving averages with a volatile action. At the end of the day, the index formed an inside bar on the daily chart.

The breakout level for the same on the upside is at 14,850. The hourly chart shows that the sideways action, which the index is witnessing since the last few sessions, can result in a triangular pattern.

The index can continue with the consolidation in the short term before heading higher. The immediate support zone for the Nifty is at 14,600-14,570.

Shrikant Chouhan, Executive Vice President (Equity Technical Research), Kotak Securities

It was a volatile session on April 6. If we calculate the intraday variation, the Nifty/Sensex moved up and down by 750/2200 points.

On a daily basis, the market formed an indecisive pattern and based on that upward activity is not ruled out.

On that basis, levels of 14,790 and 49,600 and 14,820 and 49,700 will be important. If 14,820 and 49,700 are decisively crossed, the Nifty and the Sensex can jump up to 14,950 and 50,100, respectively.

If the Nifty slips below 14,540 then it can slide to 14,450 and 14,350. If the Sensex drops to 48,800, it can touch 48,550 and 48,350 levels.

April 7 is an important day and a level-based trading approach should be followed. For the Bank Nifty, 32,250 and 32,700 should be the trading range. Expect trending activity above and below the given levels.  Be stock-specific in the market.

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