Markets may tread cautiously ahead of RBI policy announcement

The Indian markets will open on Thursday after a trading holiday on Wednesday. The global markets have seen a scintillating rally over the last couple of trading sessions, particularly the US markets as the Fed Chairman suggested that a rate cut was in the offing. However, the opening on Thursday for the Indian markets may be on a cautious note as investors await RBI’s monetary policy decision which is due today. The consensus on the street is that the RBI may announce a rate cut of 25 bps. In early action, SGX Nifty was trading down by 37 points at 12,044 level.  

Asian stocks are trading flat with a positive bias on Thursday following gains on Wall Street overnight. The Japanese stock index Nikkei 225 has risen 0.15 per cent and Hong Kong’s Hang Seng is almost unchanged.

Back home, the Indian markets took a breather from the rally that took the indices to record highs on Tuesday ahead of the Reserve Bank of India’s policy decision today. The Nifty index ended 67 points lower at 12,022 and BSE Sensex closed lower by 184 points at 40,084. The broader market indices Nifty Midcap and Smallcap outperformed the benchmarks and closed down by 0.08 per cent and 0.16 per cent, respectively. A majority of the sectoral indices ended in the red with Nifty IT and Nifty Media ending as top losers, while Nifty PSU Bank and Nifty Metal closing in the green.

The US stocks were buoyant on Wednesday after comments from Fed Chairman Jerome Powell suggested a rate cut was in the offing. On the economic front, the ADP Employment Change report showed much weaker than expected private sector job growth in May. The Dow Jones Industrial Average closed higher by 0.8 per cent, the Nasdaq composite advanced 0.6 per cent and the S&P 500 Index gained 0.8 per cent.

The European indices ended Wednesday’s session in the green, but the stocks closed way off from their best levels of the day after the European Union said it will launch disciplinary procedures against Italy over its rising debt. Germany’s benchmark DAX added 0.08 per cent, France’s CAC 40 index rose 0.45 per cent and UK’s FTSE 100 ended with a gain of 0.08 per cent.