Markets are expected to open on a positive note on Wedneday amid mixed global cues. Gift Nifty at 24,525 against Nifty futures value of 24,428 signals a gap-up opening of 100 points. “We expect markets to gain some momentum in the near term on the back of positive global cues, optimism around enhanced government spending and favourable monetary policy changes by the RBI,” said Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd.
Osho Krishnan, Sr. Analyst, Technical & Derivatives of – Angel One, said: the market breadth has clearly shifted to a bullish trend, indicating an overall positive sentiment among investors. “However, it is prudent to keep positions light as we approach a significant resistance level that could potentially hinder further price gains. At present, thematic movers are in the spotlight. Therefore, one should concentrate on these thematic movers as they are more likely to present worthwhile opportunities in the short term,” he said.
According to analysts, the return of foreign portfolio investors as buyers was heartening to see. They bought shares worth ₹3,665 crore on Tuesday. If they maintain a neutral to positive stance, equity markets will recover, they added.
The focus has now shifted to the RBI monetary policy, the outcome of which will come on Friday. Though most expect a status quo stance, there are expectations that RBI may reduce the mandatory cash reserve ratio to boost economy activity. IF RBI reduces CRR, it is likely to benefit,
“The massive GDP undershoot has meant that the policy trade-offs have become even more acute as the economy looks to be in a stagflationary state. Even as the RBI’s growth/ inflation forecast will see significant downward/ upward revisions, an immediate rate cut may not be easy for the MPC to justify, especially as their commentary has been assertive on durable disinflation being the primary mandate. Nonetheless, the pressure on convention easing is only going to mount as growth looks structurally pale. The timing and window of cuts is tricky and small amid fluid global dynamics, while the RBI may also want to weigh the FX cost of rate cuts (liquidity implication/ sterilisation cost, and imported inflation). Non-conventional policy tools such as liquidity easing could act as a good balancing act, with a CRR reversal to the pre-Covid 4 per cent level, implying an infusion of ₹1.2 trillion at a time when core liquidity may steadily move to a deficit ahead, with unsterilised FX intervention and CIC leakages. We watch for easing regulatory-lending norms ahead to revitalise the waning credit offtake,” Emkay Global Research said in a note.
Meanwhile, Asian stocks are mostly down due to confusion on South Korea.
