Sensex and Nifty opened mildly higher on Wednesday, as investors awaited the outcome of the RBI policy meeting. The central bank is expected to keep the interest rates unchanged, but may announce some liquidity measures to support the economy. The market sentiment was also boosted by the positive global cues, as the US Fed signaled a dovish stance for 2024.
RBI policy meeting in focus
The Reserve Bank of India (RBI) is scheduled to announce its bi-monthly monetary policy at 10 am today. The market expects the RBI to maintain the status quo on the repo rate, which is currently at 4 per cent, and the reverse repo rate, which is at 3.35 per cent. The RBI has kept the rates unchanged since May 2020, as it has prioritized growth over inflation.
However, the market will also look for any liquidity measures that the RBI may announce, such as the continuation of the variable rate reverse repo (VRRR) auctions, the extension of the targeted long-term repo operations (TLTROs), or the introduction of a new bond buying program. The RBI has been injecting liquidity into the system through various tools, to ensure smooth credit flow and financial stability.
Global cues lift market mood
The market mood was also lifted by the positive global cues, as the US Fed signaled a dovish stance for 2024. The Fed said that it expects to start raising interest rates in 2024, but at a gradual pace. The Fed also said that it will continue its bond buying program until there is substantial progress in the economic recovery.
The Fed’s outlook boosted the global markets, as it eased the fears of a sudden tightening of the monetary policy. The US stocks closed at record highs, while the Asian stocks also traded higher. The European markets are also expected to open higher, as the investors digest the Fed’s comments.
Sectoral and stock-specific action
The sectoral indices on the BSE and the NSE were mixed, as the investors took a cautious approach ahead of the RBI policy outcome. The IT, auto, and pharma sectors were among the top gainers, while the banking, metal, and FMCG sectors were among the top losers.
The stock-specific action was driven by the earnings season, as some of the prominent companies announced their quarterly results. Paytm, the digital payments giant, rose by 4 per cent, as it reported a 40 per cent growth in its revenue and a 23 per cent reduction in its losses. LIC, the insurance behemoth, also gained by 3 per cent, as it posted a 19 per cent increase in its net profit and a 12 per cent rise in its new business premium.
Market outlook and levels to watch
The market outlook remains positive, as the investors expect the RBI to maintain an accommodative stance and announce some liquidity measures. The market also expects the earnings season to remain strong, as the companies report their performance for the third quarter of FY24. The market also hopes for a smooth budget session of the parliament, where the government may announce some reforms and stimulus measures.
The Sensex is likely to face resistance at 72,000 and 72,500 levels, while the support is seen at 70,000 and 69,500 levels. The Nifty is likely to face resistance at 22,000 and 22,500 levels, while the support is seen at 21,000 and 20,500 levels.