Indian shares are set to begin trading flat to slightly lower, with analysts pointing to concerns that markets have become overbought in recent sessions.
The Reserve Bank of India offered a measured note of optimism, stating that India’s GDP is within striking distance of attaining positive growth.
The central bank notably tied its recovery outlook to vaccination progress, saying the letter “V” in the V-shaped recovery stands for vaccine.
“Recent high-frequency indicators suggest that the recovery is getting stronger in its traction and soon the winter of our discontent will be made glorious summer,” the central bank said in its January Bulletin.
Earnings results from several major companies may help cushion any early losses, with upbeat quarterly numbers providing some underlying support to investor sentiment.
Asian Paints, Bajaj Auto, and Jindal Steel and Power all posted strong results for the December quarter, offering traders a degree of confidence heading into the session.
Benchmark indexes the Sensex and the Nifty surrendered early gains in the prior session, closing modestly lower as buyers failed to sustain momentum through the afternoon.
The rupee continued its recent run of strength, adding another 6 paise to close at 72.99 against the dollar, its highest level in over four months and extending gains for a third consecutive session.
Broader Asian markets pulled back from record highs, with investors reassessing positions as the dollar headed toward its worst weekly performance of the year so far.
Oil prices also fell during the session, pressured by an unexpected build-up in U.S. crude stockpiles alongside growing concerns over new pandemic-related restrictions in China.
The combination of stretched valuations, mixed global cues, and cautious commodity markets is likely to keep Indian equities in check at the opening bell.
Investors will be watching closely for any fresh central bank commentary or corporate earnings updates that could shift sentiment during the trading day.
