Indian shares set to open higher ahead of RBI policy decision

Indian shares are set to open higher on Wednesday, with investors anticipating dovish signals from the Reserve Bank of India’s policy decision to counter risks from US tariffs and H-1B visa fee hike, even as they expect it to hold rates steady.

Gift Nifty futures were trading at 24,765.5 points as of 7:19 a.m. IST, indicating that the benchmark Nifty 50 will open above Tuesday’s close of 24,611.1.

The RBI’s monetary policy decision is due at 10:00 a.m. IST, with nearly three-quarters of economists in a Reuters poll expecting rates to remain unchanged.

The central bank held rates steady at its August meeting, following its surprise, front-loaded 50-basis-point rate cut in June.

“We expect the RBI to hold policy rates, though it remains a close call since inflation is expected to remain benign going forward and lack of a trade deal with the US increases external headwinds to growth,” said analysts led by Sajjid Chinoy of J.P.Morgan.

However, the central bank’s guidance could indicate space for further easing if growth surprises to the downside, according to J.P.Morgan.

A rate cut would lower borrowing costs, lift consumption, and bolster corporate earnings, providing a boost to domestic equities.

Since the last policy decision on August 6, the Nifty has risen 0.15%, as the government’s tax cuts balanced the adverse impact from steep US tariffs and the H-1B visa fee hike, both of which triggered foreign outflows from domestic equities.

Foreign portfolio investors (FPI) have offloaded domestic equities worth $2.7 billion in September, after selling about $6 billion in the previous two months.