Indian shares set to open higher ahead of cenbank policy decision
INDIA-STOCKS/:INDIA STOCKS-Indian shares set to open higher ahead of cenbank policy decision
Dec 6 (Reuters) - Indian shares are set to open higher on Friday, ahead of the Reserve Bank of India's (RBI) monetary policy decision, with investors anticipating some form of policy easing after a sharp slowdown in economic growth.
The Gift Nifty futures were trading at 24,804 as of 7:09 a.m. IST, indicating that the benchmark Nifty 50 will open above Thursday's close of 24,708.4.
The blue-chip Nifty 50 and BSE Sensex indexes added about 3.3% each in a five-session rally until Thursday, led by a 3.4% jump in financials on growing optimism that the RBI will ease monetary policy one way or the other.
The RBI, whose decision is due at 10 a.m. IST, was initially expected to hold rates due to still-high inflation. But since data last Friday showed India's economic growth slowed to a seven-quarter low of 5.4% last quarter, expectations of some form of policy easing have risen.
The economic slowdown is "major setback" and the central bank is likely to start a "deeper rate-easing cycle," said Nomura, among the few that expect a rate cut.
Instead, investors increasingly believe the RBI will ease policy by lowering banks' cash reserve ratio (CRR), which had sparked the rally in financials.
"While a rate cut is unlikely, any indication of a future rate cut or a reduction in CRR to boost liquidity could provide significant support to both the equity and currency markets," said Jateen Trivedi, analyst at LKP Securities.
The midcaps and smallcaps have gained 3.8% and 4.3%, respectively, in the past five sessions, with the Nifty's 3.3% gain doubling those of its Asian peers in that period.
The rally has helped the Indian markets extend their rebound since slipping into correction territory last month.
Separately, foreign institutional investors remained net buyers of Indian stocks for the third session on Thursday, purchasing shares worth 85.40 billion rupees ($1.01 billion), the third-highest single-day inflows so far in 2024.
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($1 = 84.6930 Indian rupees) (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema)
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First Published:6 Dec 2024, 07:43 AM IST
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