Indian equity benchmarks fell after seeing-saw between gains and losses in early trade on Wednesday, extending losses for the fourth straight day ahead of a widely expected rate hike, with traders eyeing RBI’s outlook in its fight against domestic inflation. But waiting for details.
The BSE Sensex index fell 44.86 points to 62,581.50 after opening in the green in early trade, and the broader NSE Nifty index was in the red after opening marginally higher.
Prashant Tapase, Senior Vice President (Research), Mehta Equities said, “Markets may witness volatile trend in early trade on Wednesday amid weakness in other Asian indices as RBI’s monetary policy meeting on interest rates is expected.” Investors will be watching closely.”
“RBI’s statement on inflation and growth outlook will determine the market sentiment in the near term. Technically, investors should avoid taking large leveraged positions till Nifty crosses the all-time high of 18,888 points. In the sand The line is at Nifty level. Support at 18,417,” he said.
After three consecutive 50-bps (basis point) rate hikes to manage inflation, which has remained consistently high, the RBI is widely expected to hike nominal rates by more than 35 bps, decision at 10:00 am Will be at
But given that inflation in Asia’s third-largest economy has remained above the upper end of the RBI’s tolerance band of 4-6 per cent, even as it slipped to a three-month low of 6.77 per cent in October, on Attention will be given. The central bank’s outlook on prices for growth and direction.
After an eight-day bull run, Indian equity benchmarks have fallen for four days in a row, including posting record closes for six consecutive days.
The index had moved to an all-time high on recent signs of easing inflation and easing crude oil prices, which is beneficial for India, a significant crude importer.
However, the index has been volatile in the last three sessions due to the RBI meeting and solid US data, which has dampened hopes that the Federal Reserve will ease the rate hike cycle.
Globally, investors tempered their enthusiasm about China’s reopening as reality chewed up expectations of a soft economic landing in the United States, stalling a rally in world stocks.
Overnight, the S&P 500 fell for the fourth session in a row, snapping a nearly two-month losing streak. Brent futures are now trading around $79.50 a barrel, about where oil was at the start of the year.
The Nikkei in Japan fell 0.5 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 percent.
“Some of the optimism that had driven the rally is being put to the test,” Shane Oliver, head of investment strategy at Australia’s AMP, told Reuters.
“We are transitioning from worrying about inflation and interest rates to one where negative growth is waning and profits are shrinking,” he said.
Big banks in the US are bracing for a poorer economy in 2019 as rising rates and inflation hurt consumer demand. Top executives at Goldman Sachs, JP Morgan, and Bank of America sounded pessimistic in their Tuesday comments.
“Economic growth is slowing,” Goldman Sachs CEO David Solomon told Reuters. “When I talk to my clients, they seem extremely alert.”
Long-term bonds gained in response to those growth concerns, and the safe-haven dollar was able to stem recent declines.
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