India Stock Futures Steady Ahead of Central Bank Rate Decision

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India’s stock futures remained stable on Friday as investors awaited the central bank’s first monetary policy decision following Prime Minister Narendra Modi’s weak election victory, which raised concerns about potential fiscal populism.

June contracts for the benchmark NSE Nifty 50 Index showed little change after dropping slightly earlier. The underlying NSE Nifty 50 Index had risen in the previous two sessions and is now just 2% away from recovering all its election-related losses. Offshore Indian rupee non-deliverable forwards also showed minimal movement.

According to a Bloomberg survey of 34 economists, the Reserve Bank of India is expected to keep the benchmark rate at 6.5% for the eighth consecutive meeting. This decision comes shortly after Modi’s Bharatiya Janata Party lost its majority in parliament, leading to the formation of a coalition government.
According to a note written by Abhishek Gupta, an economist at Bloomberg Economics, the Reserve Bank of India cannot overlook the market’s negative response to Prime Minister Narendra Modi’s defeat in the polls. However, Gupta does not anticipate the central bank responding with a rate cut before any reductions made by the Federal Reserve.