Indian Equities Open Higher Ahead of RBI Policy Decision

On Wednesday, Indian equities began the trading session on a positive note as investors await the potential outcomes of the Reserve Bank of India's (RBI) policy meeting later this week. The Sensex edged up by 20 points, representing a 0.02% increase, settling at 80,865.77. Similarly, the NSE Nifty gained 7.55 points, or 0.03%, reaching 24,464.7.

In terms of sector performance, there was broad-based buying activity across various sectors, though the pharma and media indices exhibited some weakness.

The Nifty Bank index also showed resilience, with gains among key players like HDFC Bank, Canara Bank, and AU Bank contributing to the positive sentiment.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the current market dynamics, stating, "The signals from the market are a bit confusing. It has overlooked the significant slowdown in Q2 GDP growth and has remained strong despite considerable selling pressure from foreign institutional investors (FIIs). There are several potential challenges stemming from the Trump presidency that could impact markets. With the Nifty trading at approximately 20 times the estimated earnings for FY26, valuations appear elevated. Given this scenario, it is advisable for investors to adopt a cautious approach, focusing on prudent asset allocation."

Despite the challenges, the market's resilience suggests it may be prudent for investors to stay the course. For those with a low-risk appetite, it could be wise to consider reallocating some funds from overvalued mid and small-cap stocks into large-cap stocks and also into debt securities, Vijayakumar added.

The recent trend of FIIs turning into net buyers is a positive development that could help maintain the robustness of large-cap stocks. In the previous trading session, FIIs purchased equities valued at Rs 3,426.39 crore in the cash market.

According to Prashanth Tapse, Senior VP of Research at Mehta Equities, signals from the GIFT Nifty indicated a cautious market opening today. Investors are closely monitoring a speech by Fed Chair Jerome Powell, while political tensions rise as Donald Trump urges BRICS nations to refrain from new currency developments. Shares of US Steel dropped 8% after Trump opposed a significant $15 billion takeover proposal by Japan's Nippon Steel.

Looking ahead, major factors that could influence market direction include the RBI's Monetary Policy Committee (MPC) meeting on Friday and upcoming US non-farm payroll data.

Asian Markets Overview

In broader Asia, the MSCI Asian ex-Japan index was trading lower, down 0.4%, at 584.09. The Hang Seng and Straits Times indices showed a slight uptick, while Japan's Nikkei saw a decrease of 0.4%.

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