Indian shares set to open flat ahead of RBI policy decision

Mint

19 hours ago

Aug 6 (Reuters) - Indian shares are set to open little changed on Wednesday ahead of the Reserve Bank of India's (RBI) policy announcement, with investors anticipating a rate pause and dovish signals to offset rising external risks, particularly the proposed U.S. tariffs.
Gift Nifty futures were trading at 24,670 points as of 7:04 a.m. IST, indicating that the Nifty 50 will open near Tuesday's close of 24,649.55.
The RBI is widely expected to hold rates steady at its policy decision scheduled at 10:00 a.m. IST, following its surprise 50-basis-point cut in June, which was accompanied by a shift to a "neutral" stance.
While the central bank had previously signalled limited room for further easing, expectations for the reassurance of growth and dovish commentary have intensified following the U.S.'s 25% tariffs on Indian goods.
"In light of the proposed U.S. tariffs, markets will be looking for a dovish tone and clear reassurance on growth support," said Gaurav Garg, analyst at Lemonn Markets Desk.
"The Governor's guidance on balancing domestic demand with external headwinds will be key."
Since the June 6 policy, the Nifty 50 has slipped 1.41%, weighed down by muted earnings and global uncertainty.
Foreign portfolio investors were net sellers for 12 straight sessions till Tuesday, reacting to trade concerns and earnings disappointment. Meanwhile, domestic institutional investors sold stocks in 22 sessions, providing some cushion to FPI outflows.
"The sustained FPI selling was largely driven by a combination of subdued Q1 earnings, a strong U.S. dollar and uncertainty surrounding the U.S-India trade negotiations," said Manish Goel, founder and managing director at Equentis Wealth Advisory Services.
FPI outflows may continue till there is greater clarity on trade policy and an improvement in corporate earnings, Goel added.
Broader Asian markets opened lower, while Wall Street declined overnight as investors weighed tariff concerns and weaker than expected U.S. economic data. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy and Janane Venkatraman)