Markets likely to get flat-to-positive start ahead of RBI policy outcome

Indian markets rebounded on Tuesday, after six consecutive days of decline, and closed near the day's high primarily driven by a recovery in select heavyweight stocks. Today, markets are likely to get flat-to-positive start tracking gains in global markets. Also, sharp fall in crude oil prices overnight likely to aid domestic sentiments. Crude oil futures fell more than 4 per cent on Tuesday as the rally spurred by heightened geopolitical risk slowed, with the market awaiting Israel's response to Iran. Domestically, investors will be taking note of report that in the Assembly election results announced on Tuesday, the Bharatiya Janata Party (BJP) successfully returned to power for a third consecutive term in Haryana, achieving its best-ever vote share and seat tally. Now, investors will have their eyes trained on the RBI monetary policy committee decision announcement scheduled for 10 AM by the Reserve Bank of India Governor Shaktikanta Das. The Indian central bank governor is likely to announce a hold on interest rates at current levels, but his commentary on inflation expectations and GDP growth estimates is what investors will be eyeing. There will be some buzz in FMCG stocks with report that leading FMCG players expect rising palm oil prices, higher input costs and increased advertising and promotion expenses to impact their margins and profits in the September quarter. Stocks related to education sector will be in focus as a recent analysis by Crisil Ratings showed that schools and colleges in India are expected to report a 12 to 14 per cent rise in their revenue this financial year. This revenue growth is driven by higher enrolments, increased demand for new courses, and the opportunity for upward fee revisions. There will be some reaction in real estate stocks as with a private report that India’s real estate sector is expected to witness sequential moderation in the second quarter of FY25, driven primarily by lack of big launches from major real estate companies. Tea stocks will be in limelight as Tea Board said tea exports between January and July this year have touched 144.50 million kilograms, up by 23.79 per cent from the year-ago period. The country had shipped out 116.73 million kilograms in the corresponding period of the 2023 calendar year.

The US markets ended higher on Tuesday recovering some losses from the previous session as investors returned to technology stocks and shifted their focus to upcoming inflation data and the beginning of the third-quarter earnings season. Asian markets are trading mostly in green on Wednesday tracking overnight gains on Wall Street.

Back home, Snapping their six-day losing streak, Indian equity benchmarks ended near the day's highs on Tuesday primarily driven by a recovery in select heavyweight stocks. Markets made a cautious start but soon gained traction and continued to move up for better part of the sessions, as traders took support with Commerce and Industry Minister Piyush Goyal’s statement that India is poised to attract $100 billion in investments from the United Arab Emirates in the coming years. Separately, he also said it is time for the Indian rupee to appreciate on the back of inflows in debt and equity markets. Some support also came with Oil Minister Hardeep Singh Puri’s statement that with global oil prices flaring due to widening conflict in the Middle East, India is watching the situation carefully and is confident of navigating any challenges it may pose. Sentiments remained up-beat in late afternoon deals, taking support from domestic rating agency ICRA’s report in which it has estimated that loan securitisation volumes of standard assets touched Rs. 60,000 crore in the September quarter. Securitisation grew 36% sequentially and 31% on year basis. It noted that the sharp increase in the quarterly volumes has been fuelled by large private sector banks selling down their portfolio to improve their credit-to-deposit ratio, given the relatively lower pace of deposit accretion being witnessed. Traders overlooked exchange data showing that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 8,293.41 crore on Monday. Meanwhile, the Central Board of Direct Taxes (CBDT) has formed an internal committee to oversee a comprehensive review of the Income-tax Act, 1961 (Act), as was announced in the Union Budget 2024-25 by Finance Minister Nirmala Sitharaman. The goal is to make the Act concise, clear, and easy to understand, which will reduce disputes, and litigation, and provide greater tax certainty to taxpayers. Besides, all eyes will be on the Reserve Bank of India’s (RBI’s) credit policy outcome on Wednesday, although there are expectations that the central bank could maintain status quo on interest rates. Finally, the BSE Sensex rose 584.81 points or 0.72% to 81,634.81, and the CNX Nifty was up by 217.40 points or 0.88% to 25,013.15.