Sensex, Nifty to open higher ahead of RBI policy; rate sensitive stocks in focus

Ahead of the highly awaited Reserve Bank of India’s (RBI) policy decision, the Indian equity market is slated to open flat-to-higher on Friday, tracking mixed cues from global peers. The positive trend at Gift Nifty also indicates a gap-up start for Sensex and Nifty, with Gift Nifty futures trading 20.5 points, or 0.10%, higher at 23,713.50 level.

On the domestic front, RBI MPC outcome and Delhi state election results are key triggers for the market, while global factors such as the ongoing trade war amid U.S. President Donald Trump's tariff plans may add an element of uncertainty in the equity markets.

Rate-sensitive stocks in focus

Rate-sensitive sectors such as banks, auto, realty, and financial services will be in focus today ahead of a potential RBI rate cut. The central bank is likely to cut repo rate by 25 basis points for the first time in almost five years after domestic rate-setting panel has kept the policy repo rate unchanged for the last 11 consecutive meetings after raising it by 250 bps between May 2022 and February 2023. Last week, in the Union Budget 2025, the central government prioritised consumption and fiscal discipline, leaving room for the RBI to stimulate growth. With GDP growth slowing to a seven-quarter low of 5.4% in Q2 FY25, a rate cut seems imminent.

Wall Street ends mixed in volatile trade

In the overnight trade, U.S. stocks ended on a mixed note in choppy trade amid mixed earnings reports while investors awaited key January job data, which will help determine the path for interest rate cycles. At the close, the Dow Jones Industrial Average was down 0.28%, while the S&P 500 and the Nasdaq Composite were up 0.36% and 0.51%, respectively. The nonfarm payrolls report, a metric used to measure the state of the labor market and the Federal Reserve’s rate path, will be out on Friday.

Asian stocks drop ahead of U.S. job data

In Asia-Pacific region, equity markets opened on a mixed note, tracking subdued closing at Wall Street overnight ahead of crucial jobs data. Japan’s Nikkei 225 dropped 0.4% as Yen climbed ahead of U.S. job data, while South Korea’s KOSPI was down 0.1%. Indonesia’s stock exchange Jakarta Composite was the worst performer in the region with a loss of 2%, while Australian market ASX 200 ended flat. China’s Shanghai Composite and Hong Kong’s Hang Sang were up 0.8% and 0.9%, respectively, while Taiwan’s Weighted stock index climbed 0.2%.

Sensex, Nifty closed in red ahead of RBI policy

On Thursday, the Indian stock market closed in negative terrain, with the Sensex dropping by 213 points to settle at 78,058, and the Nifty slipping 93 points to end at 23,603. The domestic bourses witnessed range bound trade as caution prevailed in the market ahead of the RBI policy decision. Out of the Nifty 50 companies, 30 stocks ended in red, with Trent, BEL, Bharti Airtel, Titan, and ONGC emerging as the top losers. On the other hand, Cipla, Adani Ports, ITC Hotels, Dr. Reddy’s, and HDFC Life were among notable gainers.

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