Markets likely to make negative start ahead of RBI policy meeting outcome

Indian equity markets are likely to make a negative start due to global market sell-offs triggered by escalating trade tensions between the US and China. However, some optimism may come later in the day ahead of the RBI policy meeting, with expectations of a 25 basis point rate cut. 

Some of the key factors to be watched:

RBI’s Sanjay Malhotra to announce first policy: RBI Governor Sanjay Malhotra to announce the first bi-monthly monetary policy of the current fiscal on Wednesday, amid expectations of a 25-basis points reduction in the short-term lending rate.

India, EU exploring possibility to negotiate FTA in phases: India and the European Union (EU) are exploring the option of negotiating their free trade agreement (FTA) in phases amidst an uncertain global trade environment following imposition of sweeping tariffs by the US. 

India to continue growth engine despite US Tariffs: Finance Minister Nirmala Sitharaman said that the resilience of the economy and strength of domestic demand will continue to make India an engine of growth amid the rapidly evolving global trade landscape as a result of US tariffs.

Piyush Goyal to meet exporters on US Tariff issue: Commerce and Industry Minister Piyush Goyal will meet with exporters to address concerns arising from the US's imposition of a 26% reciprocal tariff.

Prime Minister meets crown prince of Dubai: Prime Minister Narendra Modi stated that Dubai Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum's ‘special’ visit to India has paved the way for stronger bilateral collaboration. The Prime Minister made the remarks after meeting the influential leader from the United Arab Emirates (UAE).

On the global front: The US markets ended in the red on Tuesday, despite optimism about negotiations regarding President Donald Trump’s new tariffs. Asian markets are trading mostly in red on Wednesday after U.S. Treasury Secretary Scott Bessent said Japan is likely to be prioritized in trade talks with the Trump administration.

Back home, Indian equity benchmarks took a breather after previous session sharp decline, rebounding around one and half percent on Tuesday, in line with the recovery in global markets. Finally, the BSE Sensex rose 1089.18 points or 1.49% to 74,227.08, and the CNX Nifty was up by 374.25 points or 1.69% to 22,535.85.   

Some of the important factors in trade:

Govt steps up export support amid US Tariffs: The commerce ministry is stepping up efforts to help exporters explore new markets to push outbound shipments while also setting up a working group to monitor possible surge in imports from countries like China to tackle the impact of sweeping tariffs announced by the US.

India's 'applied tariffs' to US only 7-8%, not humongous: Union Commerce Minister Piyush Goyal has said the ‘applied tariffs; to the US are only 7-8%, which he described as not humongous. Declining to disclose details on the ongoing negotiations with the US, which has slapped a 26 per cent ‘reciprocal tariff’ on the country, he said India believes it can have bilateral trade pacts with countries that exercise fair trade practices. 

All eyes on RBI policy decision tomorrow: The RBI's monetary policy committee headed by Governor Sanjay Malhotra began its three-day deliberations on key interest rates on Monday. The decision is scheduled to be announced on Wednesday, where a 25-bps rate cut is anticipated.