Sensex, Nifty set to drift lower as investors eye RBI

(RTTNews) – Indian equities are likely to open cautiously on Tuesday as investors await direction from central bank meetings and US inflation data later in the week.

The RBI announces its rate decision on Wednesday, with the central bank expected to announce another 40 basis point rate hike amid rising inflationary pressures in the economy.

The central bank is also expected to revise the inflation path upwards by 70-80 basis points to account for upward price pressures.

The European Central Bank meets on Thursday amid expectations that it will confirm an end to asset purchases and signal a rate hike in July.

Friday’s inflation reading from the US will provide further clues to the Fed’s rate hike path, with markets already pricing in half-point rate hikes at policy meetings in June and July.

Benchmark indices Sensex and Nifty ended a choppy session slightly lower on Monday, while the rupee fell a notch to finish at 77.63 against the dollar.

Asian markets traded mostly lower this morning and the dollar rose as high as 132.305 yen on Tuesday – a level not seen since April 2002 – while oil rose on expectations of a recovery in demand in China.

US stocks vacated early highs and ended slightly higher overnight as crude oil prices briefly surged above $120 a barrel for the first time since March and the US 10-year Treasury yield rose above 3 percent for the first time since early May.

The Dow closed flat, while the S&P 500 rose 0.3 percent and the tech-heavy Nasdaq Composite gained 0.4 percent.

European stocks closed on Monday after a slew of positive news from China, including the easing of Covid-19 restrictions, improved data on services activity and reports of a possible US tariff cut on Chinese goods.

The pan-European Stoxx 600 gained 0.9 percent. Germany’s DAX gained 1.3 percent, while France’s CAC 40 index and Britain’s FTSE 100 each gained around 1 percent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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