The continued rally in US markets and a four-day winning streak may inspire optimism among global investors. However, Indian markets appear cautious, as overconfidence in a rate cut by the Reserve Bank of India (RBI) sparks concern.
The RBI’s Monetary Policy Committee convened yesterday, with Governor Shaktikanta Das set to announce decisions tomorrow at 10 a.m. While inflationary pressures have tempered expectations of a repo rate cut, speculation about a possible 25-basis-point reduction has gained traction. Kotak Mahindra Mutual Fund’s Deepak Agrawal pegs the likelihood of a rate cut at 70%. A simultaneous cut in the Cash Reserve Ratio (CRR) by 50 basis points, aimed at boosting bank profitability, also remains on the table. Anticipation of this “double bonus” has driven Bank Nifty higher by over 1% in the past two sessions. Today’s trade could hinge on whether these hopes materialize.
Adding to speculation, uncertainty swirls around the possible extension of Governor Das’s tenure, which is set to end on December 10.
US markets hit record highs overnight, with the Dow Jones crossing the 45,000 mark for the first time, closing 0.69% higher at 45,014.04. The S&P 500 gained 0.61%, and Nasdaq surged 1.3%. Federal Reserve Chair Jerome Powell’s upbeat comments about the US economy and the robust performance of tech stocks, including Salesforce and Nvidia, spurred the rally. Despite these gains, futures are slightly lower, signaling cautious sentiment ahead of the December 18 Fed meeting, where markets see a 76% chance of a rate cut.
Meanwhile, European markets extended their upward streak to a fourth day, though political uncertainty in France has tempered enthusiasm. Asian markets also gained, driven by the US rally, though South Korea’s index gave up early gains amid domestic political turbulence.
Indian markets closed Wednesday with marginal gains. The Nifty rose just 0.04%, while Sensex added 0.14%. However, mid-cap and small-cap indices outperformed, gaining over 1%. Banking and financial stocks rallied on rate-cut hopes, while auto and FMCG stocks lagged. Foreign investors remained net buyers, purchasing ₹1,797.60 crore worth of equities, while domestic institutions were net sellers.
Among key performers, Federal Bank shares hit a record ₹216.28 before closing 2.78% higher, while Dhanlaxmi Bank surged 12.91%. The Adani Group’s cement arm, Ambuja Cements, is reportedly exploring the acquisition of Star Cement to expand in northeastern India, sparking competition with UltraTech and JK Lakshmi Cement in the region.
Gold prices inched higher to $2,650.40 per ounce but pared gains this morning. Crude oil saw mixed movements as OPEC deliberates production cuts, with Brent crude trading at $72.31 per barrel.
Bitcoin nears the $100,000 milestone, trading at $98,950, as speculative interest in cryptocurrencies surges.
Today’s session will likely focus on the RBI’s policy announcement tomorrow. Markets may face volatility if the central bank deviates from expectations. Key resistance for Nifty is seen at 24,550–24,800, with support levels at 24,340–24,390.
The trajectory of global cues, domestic policy decisions, and sectoral performance will define the near-term market outlook.
