Trends on SGX Nifty indicate a gap-up opening for Indian indices; RBI likely to hike policy interest rates

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Trends on SGX Nifty indicate a gap-up opening for Indian stock indices.

Mohit Nigam, Head - PMS, Hem Securities for Wednesday said, the benchmark Indices are expected to open on a positive note as suggested by trends on SGX Nifty. US stock markets ended higher on Monday led by fall in bond yields. Overall sentiments still remain cautious as investors are worried about inflation and interest rates and warning by Target corp related to consumptions. Dow Jones was up by 264 points, whereas NASDAQ was up by 0.89 percent to 12711.0 levels.

Indian markets will react to the outcome of the three-day Monetary Policy Committee meeting that will be released by the RBI today. Markets are expecting 40-50 bps hike in the repo rate to counter rising inflation worries.

On the technical front 16,350 and 16600 are immediate support and resistance in Nifty 50. For Bank Nifty 34700 and 35500 are immediate support and resistance respectively, Nigam added.

Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, Domestic equities are likely to see a gap-up opening on the back of a strong upsurge in overnight US markets and early optimism in SGX Nifty. However, if the RBI's rate hike decision meets street expectations, markets may price in the hike. The Street suspects RBI will go for another 40-basis points rate hike. That said, RBI would also prefer to go slow on rate hikes in the backdrop of the government too responding to the inflation risks. The recent announcement on fuel tax cuts and reduction of import duties on edible oils will provide some comfort to the RBI. Besides the Reserve Bank of India, the European Central Bank is also set to meet next week with the outcome expected on June 9.

On June 7 (Tuesday), the benchmark indices closed in the red with Sensex down 567.98 points or 1.02 percent at 55107.34. The broader Nifty fell 153.20 points or 0.92 percent at 16,416.30.

Asian stocks up

Asia stocks rose on Wednesday, encouraged by a rally on Wall Street, but gains were kept in check by worries that aggressive central bank policy tightening will stifle global growth and raise the risks of stagflation.

Asian markets are trading on a positive side led by strong US futures and China's top cities relax COVID-19 curbs. Hang sang is trading 2 higher whereas Nikkei is trading 1% higher.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.15 percent, recouping most of its losses in the previous session, while Japan's Nikkei 225 index was up 1 percent. Australia's S&P/AS...

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