Domestic markets are expected to open negative on Friday. The focus will be on the outcome of the Reserve Bank of India’s credit policy. Besides, global cues will set the tone for the domestic market.

Gift Nifty at 22,525 signals, a gap down opening of about 100 points for NIfty, as Nifty April futures on Thursday closed at 22,612. According to analysts, the unabated selling by foreign portfolio investors will likely keep the market under pressure.

Asian equity indices are trading negatively, with most of them falling around one per cent in early Friday trading, tracking the overnight weakness in the US market. Japanese markets were the worst affected among the major Asian equities, as the Nikkei dropped over 2.4 per cent.

However, the major focus on Friday would be on RBI statements after the rate-meet outcome.

According to Shishir Baijal, Chairman and Managing Director, Knight Frank India, the RBI will likely continue with a rate pause at its first MPC meeting for FY25.

“Even though core and the wholesale inflation has significantly eased but the volatility in food prices continue to impinge consumer sentiment. Thus, keeping the headline inflation above the RBI target level of 4 per cent,” he said.

Key macros resilient

Economic growth has also continued to remain strong, as witnessed in the above-expected GDP growth during Q3 FY’24. He further said that strong growth would continue to provide adequate support for the RBI to keep policy rates unchanged for the next few months.

The RBI’s focus is likely to be on liquidity management, with the continuation of withdrawal of accommodation to keep inflation well anchored and bring it under 4%.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said: India’s March Services PMI stood at 61.2 compared to 60.3 previously, while the Composite PMI was at 61.8 versus 60.6 on a month-on-month basis.

Gold prices surged to a record high on Thursday following statements from Federal Reserve officials reaffirming expectations of interest rate cuts in 2024, although the timing remained uncertain, he said.

Traders are awaiting weekly unemployment claims and trade balance data from the US, along with speeches from Fed officials; he added that “attention will be on the RBI Monetary Policy announcement and the release of the US non-farm payrolls report.”

Stock-speicific action

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said the Q4 business updates from a few prominent companies were encouraging, driving stock-specific action in the market.

“Nifty has been consolidating in a narrow range at higher levels for the last few sessions, while broader markets have bounced back strongly, especially after a sharp recent correction. We expect some volatility especially in rate sensitive sector amid India’s central bank’s policy meeting. Overall, we maintain our positive bias on the market, and any dip can be viewed as a buying opportunity,” he added.

Examining the Open Interest (OI) data, the highest OI on the call side is observed at the 22,800 strike price, followed by the 23,000 strike price. Conversely, the highest OI on the put side is seen at the 22,300 strike price, said Mandar Bhojane, Research Analyst at Choice Broking

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, said: the Foreign Portfolio Investors (FPIs) Long Short ratio rose from 31.24 per cent on March 27 to 46.83 per cent on April 2 on the back of strong buying by FPIs in Index futures. However, the FPIs liquidated long positions and built short positions on April 3, bringing the ratio down to 43.79 per cent.

“Strong put writing (Bulls’ entry) coupled with call writers (Bears) exit was observed at the 22,500 Strike in Nifty. This led to Nifty closing above the 22,500 level. The put writers now lead the call writers at the 22,500 Strike, and the option activity at this strike will provide cues about Nifty’s upcoming direction,” he said.