GIFT Nifty falls 100 pts, signals weak start for Sensex, Nifty ahead of RBI policy; Asian markets decline

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Indian benchmark indices Sensex and Nifty are likely to open lower on Wednesday, with GIFT Nifty falling about 100 points, signalling a weak start after two consecutive sessions of gains. A decline across Asian markets and a rebound in crude oil prices could weigh on sentiment, even as Wall Street's S&P 500 and Nasdaq closed at record highs overnight. Investors will also remain cautious ahead of the Reserve Bank of India's Monetary Policy Committee decision later today.

GIFT Nifty was trading at 22,677 around 8 am, down 97 points, or 0.43 percent. Indian equities extended their pullback for a second consecutive session on Tuesday, helped by broad-based buying and positive global cues. The Sensex climbed 685.34 points, or 0.95 percent, to 73,067.81, while the Nifty advanced 220.35 points, or 0.98 percent, to 22,776.10.

The global setup is mixed. US stocks rallied to records as Treasury yields eased and investors shifted their attention towards the upcoming earnings season, but Asian equities failed to follow Wall Street higher. Meanwhile, Brent crude climbed back above $101 a barrel amid renewed supply concerns.

However, foreign institutional investors remained sellers for an eighth consecutive session, although the pace of selling moderated. FIIs offloaded equities worth Rs 2,961 crore, while domestic institutional investors bought shares worth more than Rs 5,000 crore.

Share Markets Live Updates | Sensex, Nifty, GIFT Nifty Today

Asian markets fall despite Wall Street records

Asian equities traded lower on Wednesday despite record closes for major US indices, with the MSCI Asia Pacific Index falling 0.4 percent. Japanese and South Korean equities declined, while Taiwan traded higher.

Japan's Topix fell 0.3 percent, Hong Kong's Hang Seng dropped 0.6 percent, and Australia's S&P/ASX 200 was little changed. Nikkei 225 futures declined 0.5 percent. US equity futures were largely steady, with S&P 500 futures little changed in Asian trade.

The subdued regional performance came even as global equities remained close to record levels, with the All Country World Index around 0.5 percent below its August peak.

S&P 500, Nasdaq close at record highs

US stocks rallied on Tuesday as crude prices steadied and Treasury yields eased, allowing investors to turn their attention towards the approaching third-quarter earnings season. The easing in US Treasury yields offered some relief after elevated borrowing costs had weighed on risk appetite in recent weeks.

The broad-based advance pushed the S&P 500 and Nasdaq to record closing highs. The S&P 500 gained 0.58 percent to 7,818.95, while the Nasdaq Composite rose 0.45 percent to 27,599.79. The Dow Jones Industrial Average advanced 0.49 percent to 51,521.04.

Brent rebounds above $101

Crude prices rose on Wednesday as investors weighed renewed supply risks against increased Middle East exports. Brent crude gained 0.92 percent to $101.51 a barrel, while West Texas Intermediate rose by the same percentage to $90.25 a barrel.

Supply concerns were supported by a storm heading towards US oil-producing regions and attacks by Yemen's Iran-backed Houthis on Saudi Arabia. However, higher Middle East crude supplies provided some counterweight.

RBI policy in focus

The Reserve Bank of India's Monetary Policy Committee decision later today is set to be the key domestic catalyst. Ponmudi R, CEO of Enrich Money, said the recovery in Indian equities remains sensitive to shifts in the global macroeconomic and geopolitical environment. Geopolitical risks remain elevated while crude prices have rebounded modestly from recent lows, he said.

Nifty technical outlook

Ponmudi sees 22,800 as the immediate resistance for the Nifty, with a sustained breakout potentially extending the recovery towards 23,000. On the downside, 22,600 is the immediate support, followed by 22,400. The near-term technical outlook has improved to cautiously positive after the recent rebound, although a sustained move above 22,800 and subsequently 23,000 would be needed to strengthen the recovery.