Domestic benchmark indices BSE Sensex and NSE Nifty 50 ended at a six-month high on Wednesday, ahead of the Reserve Bank of India’s bi-monthly monetary policy announcement due later today. Both the indices closed yesterday’s session less than 1% off lifetime highs. How will the RBI’s MPC decision affect the market momentum today?
Experts predict continuation of pause
In its previous policy meeting on 6 April, 2023, the RBI paused the repo rate hike, keeping the country’s key lending rate unchanged at 6.5%. The central bank also kept the standing deposit facility unchanged at 6.26%, and the marginal standing facility at 6.75%. Prior to the pause, the RBI hiked the repo rate by 250 basis points since May 2022, in an attempt to rein in inflation. As inflation cooled to 4.7% in May, comfortably within the RBI’s upper tolerance band of 6%, experts predict that the Reserve Bank of India will continue the pause.
Rupak De, Senior Technical, LKP Securities stated that RBI Governor Shaktikanta Das is likely to maintain a dovish stance, which will contribute to the market’s positive sentiment. NSE Nifty 50 recorded a breakout yesterday, just before the RBI verdict. He added that Bank Nifty is expected to move on either side following the announcement. Additionally, he added that Bank Nifty’s support is seen at 44,000 while the resistance is just past its all time high at 44,500.
Nifty 50’s movement following 6 April policy decision
Ahead of the previous RBI MPC meet, on 5 April, Nifty 50 gained 0.91% in anticipation of a favorable outcome from the central bank. On 6 April, the day of the policy verdict and announcement of the repo-rate pause, Nifty 50 settled 0.24% higher at 17,599.