Domestic markets are likely to open on a flat-to-positive note on Thursday. Analysts expect the market to remain range-bound in the early part of the trading, as the RBI is set to announce its decision on rates today. All are expecting a status qua stance and a sober comments on economic outlook.

RBI move

Lakshmi Iyer, CEO-Investment & Strategy, Kotak Investment Advisors Limited, said: “With the real rate of 100 bps, as CPI is likely to be about 5.50 per cent for FY24 and the current repo rate at 6.50 per cent, the case to maintain status quo in the upcoming policy remains.”

While GDP growth has been resilient, high-frequency indicators, especially in manufacturing, are showing some sign of incremental slowdown, which vindicates continued pause, she said, adding, “could there be a case to change policy stance, would be the key debate point in our view. US rate direction also would be a valid discussion point that could manifest in the policy.”

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If the pronouncements are on expected lines, one could see a profit taking, analysts said. On the other hand, any adverse comments on the economy or hawkish stance could trigger a momentary sell-off, they added. However, continuous buying by foreign portfolio investors will keep market in a range, they further said.

Ruchit Jain, Lead Research, 5paisa.com, said, “Traders would be watchful on the RBI policy outcome on Thursday and the market’s reaction will be important. Also, the event coincides with the weekly expiry of Nifty and the BankNifty options contracts and if we look at the open interest data, then options writers seem to have built significant positions at 18600 put option in Nifty and 44000 put options in the Bank Nifty index, which will be seen as crucial supports on the expiry day.”

Global stocks mixed

SGX Nifty at 18,820 indicates a positive opening, as Nifty futures on Wednesday closed at 18,798.40. Asian stocks are mixed with Japan stocks up even as others are down marginally. Overnight, the US stocks closed mixed; Nasdaq slumped over one per cent but the Dow Jones Industrial Average and edged up and S&P 500 slipped by 0.4 per cent.

Quantum MF’s view

According to Quantum Mutual Fund, India is in a comfortable spot to benefit from a cyclical economic upcycle over the medium term and while there could be uncertainty emerging globally or in India, as the country is heading into national elections next year; investors should not be unnerved by near-term volatility and focus on allocating prudently to equity based on their financial goals.

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“Any sharp correction due to near-term headwinds can offer additional valuation comfort and should be used to allocate more to equities with a long-term perspective,” it added.

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