Indian stocks are expected to open flat as the chances of a Fed and RBI rate pause grow

After recording gains in the prior two sessions, Indian shares were expected to begin with no change on Tuesday on the expectation that the Federal Reserve of the United States would suspend its rate hikes at its policy meeting the following week.

As of 8:14 a.m. India Standard Time (IST), the NSE stock futures that were listed on the Singapore market had decreased by 0.08% and were at 18,709.50.

Equity prices on Wall Street ended the overnight session in the red after registering weekly gains on Friday.

The release of new data indicating a slowdown in wage growth, a rise in the unemployment rate from a level not seen in 53 years, and a lack of movement in the services sector have strengthened market predictions of a halt in Fed interest rate hikes on June 14. The majority of Asian markets ended the day in the red.

The Reserve Bank of India will announce its monetary policy decision on June 8, which is what investors in India are currently anticipating. According to the results of a survey conducted by Reuters of economists, it is anticipated that the Reserve Bank of India will maintain its key interest rate at its current level both this week and throughout the remainder of 2023.

There is only a 2% difference between the Nifty 50 index (.NSEI) and the Sensex index (.BSESN) from their all-time highs.

“India’s equity market continues to be attractive despite rich valuations due to strong earnings growth and a swelling bid from both domestic and foreign investors,” analysts at Morgan Stanley said in a report on Monday. “The bid has been swelling from both domestic and foreign investors.”

The brokerage firm favours cyclical stocks over defensive ones, as well as small and midcaps over large caps, and it maintains an overweight position in the consumer discretionary, technology, and industrials sectors.

According to preliminary statistics provided by the NSE, foreign institutional investors sold Indian stocks worth 7.01 billion rupees ($85 million) on Monday, while domestic investors acquired 11.96 billion rupees ($145 million) of shares on a net basis. Both of these figures are based on share transactions.