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Informist, Thursday, Feb. 6, 2025

By Akash Mandal

MUMBAI – Gains in the benchmark indices are seen capped if the Reserve Bank of India cuts its key interest rate by 25 basis points as the same has been priced in, analysts said. However, indices may see a slight fall if the RBI does not cut interest rates at the end of its three-day monetary policy meeting Friday. The RBI will announce its decision at 1000 IST Friday.

It will be the first meeting under new RBI Governor Sanjay Malhotra, who is widely expected to announce the first cut in interest rates since May 2020. However, there are some analysts who are still unsure about a rate cut due to the sharp depreciation in the rupee recently and prospects of a global tariff war.

"...the Reserve Bank of India (RBI) is widely expected to cut the repo rate by 25 basis points. However, this decision remains finely balanced. The central bank may instead prioritise liquidity measures and defer the rate cut to the April policy review, particularly in light of mounting global uncertainties," Dhiraj Relli, managing director and chief executive officer at HDFC Securities, said.

For bulls, a surprise cut of 50 basis points on Friday is seen as the only major trigger for the markets to move higher. "I don't see any big move prior to the policy announcement, and if RBI comes up (with the) rate cut of 50 bps, then it should act as a trigger point for an upmove towards 24200 (points) spot level," Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said.

The Nifty 50 ended Thursday at 23603.35 points, down 92.95 points or 0.4%, and the BSE Sensex closed at 78058.16 points, down 213.12 points or 0.3%. Indices fell as much as 0.5% during the session but recovered some losses later. The broader market indices also fell after ending sharply higher Wednesday. The Nifty Smallcap and Midcap indices ended flat to 1.3% lower.

The Nifty 50 is expected to face resistance at its 50-day simple moving average of 23800 points and may find support at 23400 points, Kshitija Salvi, technical analyst at IDBI Capital Markets & Securities, said. In case the RBI cuts rates by 50 basis points, the Nifty 50 might break through the resistance and reach 24000 points, she added.

Friday will be a relatively relaxed day on the earnings front with Mahindra & Mahindra being the only company among the Nifty 50 constituents to report its December quarter earnings. The company is expected to report a 29% year-on-year growth in its net profit to INR 31.7 billion. Life Insurance Corp. will also report its quarterly earnings with analysts expecting the insurance giant to report a net profit of INR 12.90 billion for the quarter, up 11% on year. NHPC, Delhivery, Mazagon Dock Shipbuilders, and Alkem Laboratories will also report their earnings Friday.

Shares of Bharti Airtel might rise Friday after the company reported a consolidated net profit of INR 147.81 billion for the December quarter, beating analysts' estimates of INR 50.32 billion by a wide margin even after excluding the one-time gain of INR 75.46 billion. PI Industries also beat the Street's view with a net profit of INR 4.24 billion. Large-cap companies Britannia Industries, Hero MotoCorp, and ITC also reported their earnings Thursday. Investors will also eye the earnings of BSE and Cochin Shipyard, due later in the day.  End

Edited by Rajeev Pai

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