Indian stock benchmark indices are set to open on a flat note on Friday with investors divided over the Reserve Bank of India’s (RBI) policy decision as strong economic growth and a weakening rupee cloud the case for a rate cut. Expectations of a rate cut eased after the better-than-expected growth data and the recent slide in the rupee.
Nifty futures on the NSE International Exchange traded 4.50 points, or 0.02 per cent, down at 26,182, hinting at a muted start for the domestic market on Friday. Asian equities dropped in early trading following a lackluster session on Wall Street. Nikkei was down more than a per cent, while Hang Seng shed half a per cent. KOSPI managed to edge higher.
Investors await the RBI policy outcome with continued focus on rate-sensitive sectors including banking, auto, realty amongst others, along with the US CPI print due tomorrow, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. “Markets are likely to remain in consolidation mode, though a potential rate-cut by the RBI could act as a strong short-term catalyst.”
US stocks closed near the unchanged mark on Thursday drawing support from elevated hopes for a Federal Reserve interest-rate cut next week. The Dow Jones Industrial Average fell 31.96 points, or 0.07 per cent, to 47,850.94, the S&P 500 gained 7.40 points, or 0.11 per cent, to 6,857.12 and the Nasdaq Composite gained 51.04 points, or 0.22 per cent, to 23,505.14.
The US dollar languished not far from a five-week low against its major peers on Friday as investors braced for a Federal Reserve rate cut next week. The dollar index was flat at 99.065 early in Asia.
WTI oil prices were heading for weekly gains of close to 2 per cent in early trading, supported by an expected US Fed interest rate cut, escalating US-Venezuela tensions and stalled peace talks in Moscow. It would be a second straight week of increases. Brent crude was up 0.09 per cent, at $63.32 per barrel, while US West Texas Intermediate was 0.07 per cent, at $59.71 a barrel.
The mixed performance of heavyweights from other sectors, along with subdued smallcap action, is keeping overall sentiment in check, said Ajit Mishra, SVP of Research at Religare Broking. “We maintain a positive yet cautious outlook, emphasizing disciplined stock selection and prudent trade management.”
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 1,944.19 crore on Thursday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 3,661.05 crore on a net-net basis.
RBI policy expectations
Vinayak Magotra, Product Head at Centricity WealthTech does not expect the RBI to cut rates at this meeting. Headline inflation has definitely eased and provided room for rate cut, but the improvement looks less durable given the persistent volatility in and seasonality associated with food prices. Holding the policy rate steady will allow for more clarity on global financial conditions.
Inflation has softened significantly, liquidity conditions have stabilised, and economic activity remains robust—creating an opportunity for the MPC to shift toward a more growth-supportive stance, said Mayur Modi, Co-founder & Co-CEO at MoneyBoxx Finance. “A reduction in the repo rate at this stage could help ease financing costs, stimulate consumption, and strengthen investment sentiment across key sectors.”
Nifty50 & Sensex outlook
“We believe that a reversal formation on daily charts, indicating a pullback, is likely to continue in the near future. For day traders, now, 26,000/85,000 and 25,900/84,800 would act as key support zones,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.
On the higher side, 26,100-26,125/85,500-85,650 would act as a crucial resistance area for the bulls. A successful breakout above 26,125/85,650 could push the market up to 26,200-26,250/86,000-86,200. On the flip side, if the market falls below 25,900/84,800, it could retest levels around 25,800-25,775/84,500-84,400, he adds.
However, the day’s pullback lacks the strength to decisively reverse the short-term weakness, as the index continues to trade below its 5- and 10-day EMAs, said Vinay Rajani, Senior Technical & Derivative Analyst at HDFC Securities. “On the downside, the recent swing low at 25,842 remains a crucial support, while the 26,150–26,200 zone is expected to act as a strong resistance.”
Technically, the 26,100–26,150 zone is expected to act as crucial resistance, while support is placed at 25,900–25,950. A fall below 26,000 may trigger a quick correction towards 25,950–25,900, as the chart setup appears weak on the hourly time frame, said Rupak De, Senior Technical Analyst at LKP Securities.
Nifty Bank outlook
Nifty Bank, formed a Doji candle on the daily chart, signalling indecisiveness among market participants ahead of the RBI policy announcement, said Sudeep Shah, Head of Technical and Derivative Research at SBI Securities.
“Going ahead, the 20-day EMA zone of 59,000–58,900 is expected to act as a key support area for it. On the upside, the zone of 59,600–59,700 will serve as an important hurdle. A decisive move beyond either of these levels could lead to a strong directional trend,” he said.
Bank Nifty has formed a doji candle with long shadows in either direction signaling consolidation ahead of the RBI monetary policy outcome. We expect the index to consolidate and form a base in the range of 58,500-60,100 in the coming sessions. A follow through strength will open further upside towards 60,400 and then towards 61,000 levels, said Bajaj Broking.
“The entire up move of the last 2 months is well channelled signaling sustained demand at elevated levels. Key support is placed at 58,300-58,600 levels being the confluence of the last two weeks lows and recent breakout area. Holding above the support area will keep the short-term bias positive,” it adds.
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