Benchmarks BSE Sensex and NSE Nifty are likely to open on a dull note on Wednesday, amid mixed global cues. The US Stocks, overnight, closed in the red but recovered sharply from day’s low level. Stocks in Asia-Pacific region are trading in narrow range. Gift Nifty at 19606, indicates a flattish opening, as Nifty futures on Tuesday closed at 19611. 

Another day lacklustre trading is on the cards for domestic markets, said analysts. Foreign portfolio investors continue to see in the domestic markets in the last few days, they said. However, domestic institutions have increased their buying, they added.

Meanwhile, all eyes are on the ongoing RBI monetary policy meet, which will disclose their recommendations tomorrow. Though most analysts a status quo stance, the rising inflation is a cause for worry. 

According to Madhavi Arora of Emkay Global Financial, the upcoming MPC policy will see the RBI reiterating caution amid a spike in perishable food prices, even as easing core inflation. Possible mean reversion in food price trends in Q4CY23 would keep the RBI on hold, with a focus on the durable elements of inflation. “The RBI will miss the Q2FY24 CPI forecast by 1.2 percentage points and will likely revise its FY24 estimates upwards (Emkay: 5.4%). 

The MPC will also maintain its guidance of withdrawal of accommodation, at a time when liquidity deluge has meant that call money rates are consistently lower than the repo rate. “Although we do not expect any blunt action (CRR, MSS, SDF hike), we do not completely rule out options like shorter tenor VRRR to improve the quantum of RBI’s liquidity absorption and FX intervention route. We expect the G-Sec curve to remain flat, with the 10-yr yield reversing course by September-end towards 7.00-7.05 per cent,” she added.

Analysts expect the consolidation phase to continue at domestic markets,

According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial ServicesLtd, “As we move towards the end of Q1FY24 results season, action will shift to macro factors, with many economic data due for release during the week. 

Investors await key inflation data from US, India and China for further market direction. Also locally, RBI meeting kicked off today, the results of which would be declared on Thursday. “We thus expect market to consolidate, while Interest sensitive sectors are likely to be in focus,” he added.