Markets to make a soft-to-cautious start ahead of RBI’s policy announcement

The Indian markets climbed down from their four months high in the last session ahead of the RBI’s policy decision and on uncertainties over the timing of Federal Reserve rate hike in US. Today, the start of the crucial day is likely to be cautious and all eyes will be on Reserve Bank of India’s monetary policy statement, slated to be announced later in the day. The central bank is expected to cut repo rate by 25 basis points on falling inflation and the government's fiscal prudence in Budget. Marketmen will also be getting some support with a private report stating that the global economic order is expected to shift from advanced to emerging economies over the next few decades, and by 2040 India could edge past the US to become the world's second largest economy in purchasing power parity (PPP) terms. There will be buzz in the India Inc on a report that concerns about protectionism in the US and Brexit in Europe are likely to make India a favourable destination for merger and acquisition (M&A) deals. There will be some action in PSU oil marketing companies, as global tumbled more than 1 per cent on Tuesday. There will be lots of important earnings announcements to keep the markets buzzing.

The US markets made a modestly higher close in last session despite coming  well off their best levels of the day, the Nasdaq still reached a new record closing high in a positive reaction to the batch of largely upbeat quarterly results. The Asian markets have made a weak start with some indices witnessing cut of around half a percent in the early deals. The Japanese market too was trading lower after the yen reversed an early decline after the nation’s central bank offered to buy bonds for the third time in a week.

Back home, tremors of earthquake of 5.8 magnitude, which hit Uttarakhand on Tuesday, was felt on Indian stocks market too, as the frontline benchmark indices slipped over quarter percent with investors remaining on the sidelines and refraining from any buying activity ahead of the Reserve Bank of India’s (RBI) bi-monthly monetary policy committee meeting on Wednesday. RBI, in its sixth bi-monthly policy statement for the year, may have to delay the repo rate cut until a better picture emerges out of the remonetisation exercise. Sentiments remained downbeat on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 403.52 crore on February 6, 2017. Besides, weakness in other Asian markets coupled with depreciation in rupee value against the dollar also spoiled sentiments. After rising for nine straight days, the rupee turned weak by 15 paise to 67.37 against the dollar on Tuesday on fresh demand for the American currency from importers. However, losses remained capped with commerce and Industry Minister Nirmala Sitharaman’s statement that disbanding FIPB (Foreign Investment Promotion Board) will further improve ease of doing business and the respective regulators of the ministries concerned are ‘sufficient’ to take care of investment proposals. The decision, the minister said, is in line with the government's policy for 'maximum governance and minimum government'. Some support also came with the report that the Centre is looking at developing economic corridors and planning to come up with logistic parks on national highways.  Meanwhile, some steel stocks came under pressure on report that the government would not extend protectionist minimum import price (MIP) on 19 colour-coated steel products. On the global front, Asian markets ended mostly lower on Tuesday as political and economic uncertainty sent investors sheltering in the Japanese yen and gold, while expectations China's foreign exchange reserves had fallen for a seventh month added to nervousness. Back home, finally, the BSE Sensex declined 104.12 points or 0.37% to 28335.16, while the CNX Nifty was down by 32.75 points or 0.37% to 8,768.30.