How will Indian market react tomorrow? Windfall tax, RBI policy, Q4 in focus

On Monday, Sensex surged by 114.92 points or 0.19% to close at 59,106.44. Nifty 50 jumped by 38.30 points or 0.22% to end at 17,398.05. Smallcap stocks were top performers. Oil and gas stocks are under pressure after the OPEC+ production cut, while auto stocks rallied robustly post the monthly sales figures.

Also, at the interbank forex market, the rupee closed at 82.3325 against the US dollar — slightly weak from the previous closing print of 82.1650 per dollar. Crude oil prices weighed on Asian currencies against the greenback.

On Tuesday, oil and gas stocks will be in focus after the government trimmed windfall gains tax on domestic crude oil to nil from ₹3,500 per tonne, while halving the levy to 50 paise per litre on diesel exports with immediate effect. Also, the levies on the export of aviation turbine fuel (ATF) and petrol continue to be nil. Notably, it would be the 18th fortnightly revision of the duties.

While corporate earnings season for the fourth quarter of FY23 will keep specific stocks in focus. IT giant TCS will kick start the quarter with Q4 results to be announced on April 12th followed by Infosys and HDFC Bank on April 13th and April 15th respectively. Others will follow suit in the month.

What to expect tomorrow in markets?

Although the current week is a holiday-shortened week, markets still have plenty of developments to react on.

According to Mitul Shah – Head of Research at Reliance Securities, ahead, markets will mull over the PMI data in India and globally, the jobs data in the US as well as the RBI’s rate decision and commentary on growth and inflation. Higher crude prices with Brent crossing $84/barrel along with the prospect of above normal temperatures in 1QFY24 followed by below normal monsoon could act as headwinds for the Indian markets.

Going ahead, Ajit Mishra, VP – of Technical Research, Religare Broking said, upbeat global cues combined with bargain hunting in index majors are helping the index to inch higher. We expect the prevailing tone to continue however caution ahead of the MPC meet may result in some consolidation. Meanwhile, stay stock specific and maintain “buy on dips”.

For Wednesday, Rohan Shah, head technical analyst at Stoxbox said, “The market remains sideways throughout the day. Intraday traders can look for long opportunities only above the resistance level of 17,450 if the closing comes above 17,450 in the 15 min chart. Traders can look for fresh shorts only if nifty breaks the 17,200 level & remains below for 15 min to ensure short.”

In regards rupee, as per Religare Broking, importance might be given to OPEC meeting, PMI numbers, Crude Oil Inventories & RBI’s Interest Decision during the week. It added, “with Crude prices rising and having a positive correlation on the USDINR pair, we expect the pair to remain in the 82 to 82.60 range for the short term.”

Lastly, the brokerage added market participants will now be looking at Crude Oil Inventories data during the week while RBI’s interest rate decision on the 6th will play the crucial decider for the pair.

RBI has already begun a 3-day meeting on April 3rd for the first bi-monthly monetary policy outcomes for FY24. The final decision will be announced on April 6th. The majority of experts believe a 25 bps rate hike is likely a possibility in the upcoming policy.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.