Sensex Down 197 Points, Nifty at 23,559; Nifty Prediction for Monday

Nifty Prediction for Monday

Profit Booking After RBI Policy Announcement: What to Expect for February 10

The Indian stock market faced a third consecutive day of decline on February 7, 2025, following the announcement of the Reserve Bank of India’s (RBI) latest monetary policy.

The broader market sentiment remained subdued as investors continued to react to the policy details, despite the RBI’s decision to cut interest rates.

The Nifty index slipped below the crucial 23,600 mark, closing at 23,559.95, down 43.40 points, or 0.18%. The Sensex, too, ended the day at 77,860.19, losing 197.97 points, or 0.25%.

The day witnessed mixed sectoral performances. The Nifty Midcap index rose marginally, suggesting that there was some positive movement in mid-sized companies.

However, the Smallcap index fell by 0.3%, reflecting a weaker sentiment towards smaller firms. Sectors like metals and consumer durables showed positive momentum, with the Nifty Metal index rising by 2.6%, while the Auto sector added 0.7% to its value.

On the flip side, the PSU Bank, FMCG, Media, and Oil & Gas sectors saw declines of around 1%, pointing to profit booking, especially in these traditionally safer sectors.

Despite the short-term weakness, the broader market had registered a slight rise over the week, closing with gains for the second consecutive week.

The Pharma and Metal indices were the top performers, each rising by about 3%. On the other hand, the FMCG index, which represents the defensive sectors, underperformed, falling the most during the week.

This shows that investors are favoring cyclical and growth-oriented sectors as opposed to defensive ones in the current environment.

Rupak Dey’s Technical Outlook: Positive Short-Term Trend Despite Volatility

The market showed some volatility after the RBI’s monetary policy announcement. Rupak Dey, Senior Technical Analyst at LKP Securities, observed that even with the increased volatility, the Nifty remained above the critical 21-day exponential moving average (EMA) on the daily chart.

This suggests that, despite the short-term market swings, the overall trend for the Nifty remains positive in the near term.

Dey points out that as long as the Nifty stays above 23,450, the short-term outlook remains favorable. If the index manages to break the 23,700 resistance level, it could lead to a rally towards the next key resistance at 24,050.

The market’s ability to hold above the 23,450 mark will be crucial for determining the next phase of movement.

If the index breaks below this support level, it could trigger further corrections, especially considering the heightened caution among investors.

On the flip side, if the Nifty sustains above this level, it could build momentum for an upward rally in the days ahead.

Profit Booking Triggered by RBI Policy: Mixed Sentiment Prevails

Prashant Tapase from Mehta Equities highlighted that the RBI’s rate cut, which was widely expected, did not spark any major positive surprises in the market.

Moreover, the comments made by the new RBI Governor were not seen as particularly interesting or groundbreaking.

This led to a sense of disappointment among investors, which contributed to profit booking across various sectors.

The profit booking was particularly evident in banking, oil and gas, FMCG, and power stocks, which had previously been favored by investors in anticipation of further rate cuts.

However, the market’s lack of enthusiasm following the policy announcement suggested that the rate cut was already priced in, and the absence of additional measures—such as an increase in liquidity or stronger fiscal measures—left investors with a sense of uncertainty.

As a result, sectors that had seen strong runs in recent months, including banks and energy stocks, experienced a round of selling.

Furthermore, with the ongoing trend of foreign institutional investors (FIIs) pulling back from Indian markets, there is an added layer of caution.

FIIs have been net sellers in recent weeks, and their continued exit from the domestic equity market adds to the overall risk sentiment.

Domestic investors, who had been buoyed by global liquidity and favorable domestic growth projections, are now more cautious amid these external uncertainties.

Vinod Nair’s Perspective: Rate Cuts Positive, But Market Remains Cautious

Vinod Nair, the Research Head at Geojit Financial Services, offered a more optimistic perspective on the RBI’s actions.

He stated that the rate cuts were a positive signal aimed at supporting a slowing economy. With inflation showing signs of stabilizing and global trade facing headwinds, the RBI’s decision to reduce interest rates should, in theory, encourage investment and consumption, providing some relief to the economy.

However, Nair also acknowledged that the market reaction was less enthusiastic due to the absence of other anticipated measures.

Investors had hoped for additional steps that would increase liquidity in the market or stimulate demand more aggressively.

For instance, many market participants were expecting the RBI to announce measures aimed at boosting cash flow or creating greater fiscal stimulus to support economic growth. The lack of these measures disappointed investors and led to profit booking in certain sectors.

Moreover, the RBI’s cautious stance on the economy, coupled with the reduction in short-term growth forecasts due to concerns about global trade policy and inflation, suggested that the central bank might take a gradual and cautious approach to future rate cuts.

This has tempered the bullish sentiment in the market, with investors now expecting more gradual changes in monetary policy rather than aggressive rate cuts in the near term.

Market Prediction for February 10: Cautious Optimism Amid Market Volatility

Looking ahead to February 10, the market is likely to remain in a cautious phase. While there are positive signals from sectors like metals and autos, the overall mood will be influenced by global and domestic factors.

The market may continue to see profit booking in sectors that had previously benefitted from the rate cuts, particularly banks, oil and gas, and FMCG stocks.

However, if the Nifty can hold above the critical support level of 23,450, it may provide traders with an opportunity to reassess the broader market outlook and look for opportunities in individual stocks.

Investor sentiment will likely remain mixed, as the market waits for further clarity on the global economic situation, including trade policies and inflation trends.

Domestic factors, including the performance of the corporate earnings season and the continued movements of FIIs, will also play a crucial role in shaping market trends.

Traders should be prepared for short-term volatility but also stay alert for opportunities in sectors that are showing relative strength, particularly those with solid fundamentals and growth potential.

While the market may experience some turbulence in the coming days, a careful and selective approach could lead to attractive investment opportunities in the medium to long term.