Weekly market update, Oct 06, 2023

India’s benchmark stock indices advanced on weekly basis and snapped two weeks on losses. For the week, the Sensex rose by 0.25 per cent while the Nifty 50 inched up by 0.08 per cent. On the other hand, the BSE Midcap index fell 0.81 per cent this week while the smallcap index moved up by 0.79 per cent. Indices have recovered at end of the volatile week after the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained a status quo on repo rates and policy stance, in line with Street expectations. Apart from this, strong macroeconomic indicators and resilience imparted by domestic investors also boosted sentiments of the market. On sectoral front, BSE IT rose this week while, BSE Metal and Healthcare fell the most.

Meanwhile, Indian bonds fell the most in a year after the central bank upped the ante against inflation by saying it may consider selling bonds to soak up excess funds from the banking system. The yield on 10-year notes climbed as much as 13 basis points, the most since October last year, to 7.34%, after RBI Governor Shaktikanta Das announced the plan on Friday, while keeping the policy rate unchanged. The move comes as the central bank intensifies its fight against inflation amid a surge in oil prices and a strong dollar that’s exerting pressure on the currencies of emerging markets, including India. The decision indicates a shift away from using interest rates to liquidity-management tools to control inflation, which remains a major risk. 

In the coming week, Overall, analysts expect the market to remain range-bound with a bout of volatility, despite the ease in US 10-year bond yield and a sharp correction in crude oil prices. Investors will eye a host of triggers-brimming with several key events that will guide market direction, including Q2FY24 results, macroeconomic data, foreign fund inflow, crude oil prices, and global cues.

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