Markets in wait n watch mode as all eyes on RBI policy

Mumbai: Benchmark indices failed to hold on to early gains and closed in the red for the seventh straight session on Thursday, with participants remaining in wait-and-watch mode ahead of the RBI's interest rate decision. Unabated selling by foreign funds added to the pressure, though a modest recovery in the rupee cushioned the fall, traders said. After rallying in early trade, the 30-share BSE Sensex came under selling pressure in the afternoon session and closed 188.32 points or 0.33 per cent lower at 56,409.96. Similarly, the broader NSE Nifty dipped 40.50 points or 0.24 per cent to end at 16,818.10.

"The initial uptick in the domestic market was short-lived due to its weak global peers and declining rupee. As the yield differential between India and the US fell to a multi-year low of 348 bps, foreign investors are still departing from the Indian market. Amid the ongoing global trend of aggressive rate hikes, markets are braced for a 50 bps increase by RBI.

Investors eagerly await the central bank's intervention to aid bank liquidity, curb currency depreciation, and provide updates on its monetary stance and GDP outlook," said Vinod Nair, head (research) at Geojit Financial Services. Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said: "The market was extremely volatile on the F&O expiry day, and traders preferred to cut their positions in some of the rate-sensitives ahead of the credit policy announcement.

The market is already in an oversold position and if the rate hike is above the estimate, then we could see bouts of intra-day volatility with a negative bias for some more time," he added.