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Informist, Monday, Mar. 24, 2025

By Gopika Balasubramanium

MUMBAI – Benchmark equity indices are likely to open higher Tuesday as investor sentiment is upbeat due to the overall cool-off in volatility across global markets, appreciation of the rupee against the dollar, growing hopes of a rate cut by the Reserve Bank of India in April, and a slowdown in selling of Indian equities by foreign investors, analysts said.

The positive momentum in the market is likely to continue until the Nifty 50 hits 24000 points, which may be breached Thursday, Brijesh Ail, technical analyst at IDBI Finance & Securities, said. However, investors may also look to book profits due to the sharp jump in the indices since last week, he said. The long-short ratio for foreign institutional investors is 32% as on Friday, which is much better than 21% or 15% seen a few weeks ago, he said. This indicates that foreign investors are likely to go long in the cash market, Ail said. He expects the Nifty 50 to face resistance at 23800 points and find support at 23580 points.

The Nifty 50 closed at 23658.35 points, up 307.85 points, or 1.3%. With this, the 50-stock index crossed 23600 points for the first time since Feb. 6. The BSE Sensex closed at 77984.38 points, up 1078.87 points, or 1.4%. US President Donald Trump's 'flexibility' remark on his future tariff actions also contributed significantly to the overall positive sentiment, analysts said. The strong buying in the market was also attributed to the comfortable valuations of large-cap stocks. Short covering ahead of the monthly expiry of futures and contracts Thursday also led to a spike in the indices Monday and this is likely to continue, analysts said.

There are expectations that the RBI will cut key interest rates by 25 basis points in April, which will reduce the term deposit rates for banks, ultimately bringing down their borrowing costs, a research analyst closely tracking the sector at a global brokerage said. After a few quarters, the credit rate will also start to show signs of growth, placing banks in a better place than they currently are, the analyst said. The recent measures taken by the RBI to inject liquidity into the banking system will likely pick up in the next few quarters, the analyst said. The recent fall in government bond yields is also seen as a positive for banks as it indicates the improved credit cycle will likely begin soon, the analyst said. Valuations of bank stocks are better now and the downside of these stocks is also 'protected', he said.

Market participants will also digest the Securities and Exchange Board of India's decision to raise the threshold limit for foreign portfolio investors to make additional disclosures to INR 500 billion from INR 250 billion of equity assets under management in Indian markets. Further, they may watch out for the US Flash Manufacturing And Services Purchasing Managers' Index to understand the extent of impact of Trump's tariff decisions on the US economy. To have more clarity on the state of the US economy, investors will also look at the fourth quarter gross domestic data due later in the week.  End  

US$1 = INR 85.64

Edited by Deepshikha Bhardwaj

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