Domestic markets to open on flat-to-negative note on Thursday, amid weak global cues. The focus will be on the outcome of RBI monetary policy meet. While most analysts expect, a status quo on rates, the comments from the central bankers will be closely monitored on fear that inflation will rise.

However, any shock on rate front will trigger an instant sell-off on markets.

Amit Goel, Co-Founder & Chief Global Strategist , Pace 360, “In a rapidly growing Indian economy, we expect the RBI to do a hawkish hold for the coming RBI interest rate decision. We believe that the inflation rates in India are on the upswing yet again. The inflation rates bottomed out between April and May but have sharply turned higher in June and are expected to be in the vicinity of 6.5 per cent in July which is clearly above RBI’s comfort level.”

Apart from this, the credit growth in the economy is still robust at around 15 per cent and the US Fed continues to be hawkish which puts pressure on the Indian Rupee as well. “However, it wouldn’t go so far as to increase repo rates since inflation is mainly due to food inflation and is expected to be rather transitory. So, the RBI would probably wait for some more time to decide if they need to turn even more hawkish,” Goel added.

Gift Nifty at 19530 against Nifty futures value of 19,690 indicates, a sharp gap down opening of about 160 points.

Meanwhile the Asia-Pacific stocks are mixed though the US stocks ended on weak note. 

Edward Moya, Senior Market Analyst, The Americas, OANDA, said: the US stocks pared losses after a strong auction signaled that Wall Street is very confident that inflation will continue to fall. It looks like investors will gladly be eating all the extra issuance that comes from the Treasury. Deflation in China is also providing limited optimism that disinflation pressures will steadily ease across Europe and North America. 

Prashanth Tapse, Senior VP Research Analyst at Mehta Equities Ltd, said: “Nifty defied expectations by ending the day at its highest point, even in the face of hurdles like soaring oil prices and uninspiring cues from Wall Street. The market mood brightened due to hopes of a more accommodative RBI stance, causing Nifty sellers to hesitate. This sentiment shift led to increased interest from bullish investors, driven by short covering and value-based buying. For the upcoming session, a crucial support level is seen at 19413 for Nifty. The technical outlook would turn positive if Nifty consistently trades above 19,757, indicating potential control by bullish forces. Overall, despite challenges, Nifty’s unexpected resilience and evolving market dynamics are noteworthy.”

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