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Informist, Tuesday, Apr. 8, 2025

By Gopika Balasubramanium

MUMBAI – Analysts expect benchmark equity indices to move in a small range on Wednesday, after a day of sharp rise. Some analysts say investors will focus on the outcome of the Reserve Bank of India's Monetary Policy Committee meeting on Wednesday, while others believe global markets would determine the direction of domestic indices. The latter section also said updates related to tit-for-tat tariffs between China and the US would be in focus. 

Jatin Gedia, technical analyst at Mirrae Asset Sharkehan, expects the Nifty 50 to move between 22500 points and 22800 points on Wednesday. Ajit Mishra, senior vice-president of technical research at Religare Broking, expects a volatile session Wednesday due to uncertainty about the US' actions with respect to tariffs on Chinese imports and vice-versa. He expects the Nifty 50 to find support at 22200-21800 points and face resistance at 22700-22900 points.

On Tuesday, the 50-stock index ended at 22535.85 points, up 1.7%. The BSE Sensex closed at 74227.08 points, up 1.5%. All Nifty 50 constituents barring Power Grid Corp. of India ended higher. Gains in financial services, information technology, and oil and gas stocks primarily contributed to the rise of the Nifty 50.

The Monetary Policy Committee is widely expected to lower the repo rate by 25 basis points to 6.00% on Wednesday, all 15 economists polled by Informist said. The MPC delivered its first rate cut in nearly five years in February, when it cut the interest rate to 6.25% from 6.50%. The MPC began its three-day meeting on Monday and this would be the second policy meeting under Sanjay Malhotra after he took charge as governor of the RBI. 

With the RBI policy outcome in focus, financial services stocks are likely to be at the centre stage, analysts said. Apart from sectors such as banking, financial services, and automobile sectors, which had reacted slightly to the RBI's policies over a year, are likely to be in focus on Wednesday.

Banking and financial services stocks together have the highest weightage of 37.3% in the Nifty 50. "There could be varied actions within the financial pack," an analyst tracking banking, financial services, and insurance companies at a global brokerage firm said. "Companies that lend most of their loans on fixed rates are better placed with respect to rate cut-driven market actions," he said. These are automobile financing companies such as Shriram Finance, Sundaram Finance, Cholamandalam Investment and Finance Co., and Mahindra & Mahindra Financial Services.

Among other such players are affordable housing loan companies such as Aavas Financiers and Aptus Value Housing Finance India. These companies are at a better position as their margins remain unaffected with the reduction in interest rates, the analyst said. On the other hand, Bajaj Finance, LIC Housing Finance, PNB Housing Finance, and Can Fin Homes--who lend most of their loans at floating interest rates--are likely to fall, the analyst said, adding that this would be because they have to adjust their lending rates, which could put pressure on their net interest margins in the near term.

The performance of the Indian market in the next few weeks will depend on how trading partners of the US respond to the latter's reciprocal tariffs, especially in the form of retaliation and the reaction of global markets in a volatile setting, Kotak Institutional Equities said in a strategy report on Tuesday. The broking firm also said the Indian market had fared better due to investors' "denial" of the increased geopolitical, global, and domestic macroeconomic and sector-specific risks, and also due to their faith in a reversal of the tariff and trade policies of the US. The market was also resilient with the belief that India is relatively better off in the 'reciprocal' regime, the brokerage firm said.  End     

US$1 = INR 86.27

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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