Nervous markets to see a bounce back on Wednesday, even as the snake-and-ladder game continues at the bourses. All eyes are on RBI meet outcome, which is expected before noon today.

According to analysts, the market has already discounted 50 basis points hike. However, any positive surprise on rate hike or a dovish stance by the Reserve Bank of India could trigger a strong rally in stocks, they added.

Deepak Jasani, Head of Retail Research, HDFC Securities, said: "We expect 40bps rate hike in the upcoming policy meet on June 8 and expect the RBI raising policy rates to reach 5.15 per cent by Aug/Oct. The recent measures by the government will aid in keeping the rate hike relatively shallow, though determination of terminal rate will be much more data dependent given the flux in global conditions."

Lack of positive triggers

According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, market is stuck in a broader range for last one month, which is expected to continue until any clear direction emerges on either side. While declines are bought into – support is missing at higher levels. For now the market direction appears weak with lack of any positive triggers both on the global and domestic front.

SGX Nifty at 16,505 (740 am IST), indicates a strong bounce back for domestic markets. Nifty futures on Tuesday closed at 16,429. Trend from global markets too positive. Overnight, the US Stocks which opened on weak note, closed the day with almost one per cent gains. Following suit, equities across Asia-Pacific region opened on a firm note with gains ranging from 0.4 per cent to 1.75 per cent.

Ajit Mishra, VP - Research, Religare Broking Ltd, said: the focus will be on MPC’s meeting outcome on Wednesday amid the expectation of a further rate hike. Besides, their outlook on growth and inflation holds importance. Traders should maintain extra caution in rate-sensitive and prefer less volatile stocks for day trade.

World Bank cuts forecast

World Bank lowering world economic growth will continue to weigh on investors. It lowered the US and the Euro area growth forecast to 2.5 per cent, a reduction of 1.2 percentage points for the US from January and 1.7 percentage points for the Eurozone.

Amidst a global economic deceleration from the fallout of the Russian invasion of Ukraine, the World Bank has cut India's growth prospects to 7.5 per cent for the current fiscal year. However, still India will be the world's fastest-growing economy.

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