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Taking Stock: Market rebounds before RBI policy, auto, realty stocks shine –

After a sell-off in the previous session, the Indian stock market rebounded on October 7 – a day before the Reserve Bank’s monetary policy announcement.

The BSE Sensex gained 488.10 points or 0.82 percent to end the day at 59677.83, while the broader NSE Nifty was up 144.30 points or 0.82 percent to 17790.30.

The Reserve Bank of India’s Monetary Policy Committee (MPC) will announce its bi-monthly meeting outcome on October 8. Expectations of the central bank retaining its accommodative stance without any change in key policy rates are high in the market.

Tata Motors, Titan Company, M&M, Maruti Suzuki and Eicher Motors were among the major gainers on the Nifty. ONGC, Dr Reddy’s Labs, Coal India, Britannia and HDFC were among the big gainers.

Broader indices outperformed the benchmarks, with BSE midcap and smallcap indices adding over 1 percent each.

Among sectors, Nifty Auto index rose above 4 percent, while IT index added 1.8 percent.

Stocks and sectors

On the BSE, except oil and gas, all sectoral indices ended in the green, with the Nifty realty and auto indices rising 4-6 percent.

Among individual stocks, a volume spike of more than 300 percent was seen in Bata India, Alkem and Titan.

Long buildup was seen in Cipla, Tata Motors and UntraTech Cement, while short buildup was seen in Indus Tower, Alkem and Gail.

More than 250 stocks, including Raymond, Inox Leisure, Godrej Properties, Bata India, hit a 52-week high on the BSE.

Technical view

The Nifty formed a small bodied candle and an inside bar on daily scale which indicates a tug of war between bulls and bears.

“Now it has to hold above 17,777 for an up move towards 17,900 and 17,947 levels, whereas on the downside support is seen at 17,650 and 17,580 zones,” said Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.

Outlook for October 8

Palak Kothari, Research Associate at Choice Broking

On the technical front, the Nifty has formed a Doji kind of candlestick pattern which points out confusion between a buyer and a seller. Moreover, the index has been trading above 21 DMA, which points out strength in the counter.

Momentum indicator stochastic is trading with positive crossover, which adds strength to the counter. On an hourly chart, the index has been trading with the support of the middle band of the Bollinger band formation, sustain above the same can show further upside movement. At present, the index has immediate support at 17,500 level, while resistance comes at 17,900 levels.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty had a sharp bounce on October 7 after a steep decline on October 6. This bounce is a part of the short-term consolidation process. Structurally, the consolidation over the last few sessions has taken form a triangular pattern. With today’s bounce the Nifty has once again tested upper end of the pattern & formed distribution over there throughout the day.

Hereon the index is expected to slide towards the lower end of the pattern, which is near 17,550. On the flip side, the resistance zone of 17,900-17,950 will continue to maintain pressure on the higher side.

Mohit Nigam, Head – PMS, Hem Securities

After opening in green, the Nifty maintained the lead and closed with a gain of 0.85 percent at 17,796.20. Whereas Bank Nifty closed with a gain of 0.63 percent at 37,757.20 and Sensex with a gain of 0.80 percent at 59,667.52.

With the onset of the festive season we believe strong buying can be seen in auto, textile and realty stocks. IT earnings are starting from tomorrow and the market seems to be quite optimistic on it.

On technical front, Nifty can face resistance at 17,915 levels and a good support can be seen at 17,688 levels.

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