Domestic markets are expected to open on a negative note with all eyes on the assembly election outcome and RBI meet. Gift Nifty at 24,860 signals a gap-down opening of 100 points. Analysts expect foreign portfolio investors will continue to exert selling pressure. The ongoing geopolitical tension is likely to keep the market under pressure it said. The Jammu & Kashmir and Haryana assembly results will come in today, while the RBI will declare its monetary policy outcome tomorrow.
Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said the outflow of ₹30,700 crore by foreign institutional investors in just three days of October, along with rising crude oil prices, has negatively impacted the overall sentiment. “We expect the market to remain under pressure in the near term until FII selling subsides. This week’s focus will be on the RBI policy outcome and the beginning of the Q2 FY25 earnings season,” he added.
SBI Capital Markets, in a note said, as sordid economic data trickled in, Chinese authorities announced a host of stimulus measures – from cuts in lending rates and reserve requirements, to direct fiscal support to poorer sections. “This figuratively set off the “bulls in the China shop” as commodity markets rallied, with base metals rising over 10 per cent m/m. Brent crude prices fluctuated wildly between $68-79/bbl as demand side triggers from China, coupled with supply side shenanigans, and news of escalation in tensions in West Asia set the oil markets on fire. With this fine balance subject to frequent machinations, a nimble approach across stakeholders is key,” it said.
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Kapil Gupta, Executive Director - Research, Nuvama Institutional Equities, said: “In the upcoming RBI policy review, we expect the MPC to likely maintain the repo rate at 6.5%, but adopt a more neutral stance driven by a slowdown in high-frequency indicators following a weaker-than-expected Q1 GDP growth, benign core inflation, tightening fiscal policy, and the commencement of easing by the Federal Reserve. We believe these conditions will create the groundwork for potential rate cuts, which could start as early as December.”
Meanwhile Asian stocks are also down in early deals on Tuesday, tracking the overnight weak US stocks.
Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One Ltd, said: Going ahead, it is crucial to exercise extreme caution as such correction has taken place after a long haul and rushing for bottom fishing should certainly be avoided. It is advisable to take one step at a time as the week is going to be eventful, with the MPC meeting followed by the commencement of quarterly earnings.