Benchmark indices are likely to open flat after Reserve Bank of India (RBI) kept its policy rate steady on Wednesday, as widely expected, after inflation accelerated to a seven-month high and stronger economic growth reduced the need for monetary stimulus.
The decision was widely expected after the annual rate of consumer inflation increased in October to 3.58%, driven by higher food and crude oil prices.
Nonetheless, the RBI left its policy stance “neutral” while slightly softening its language on inflation by saying risks were “evenly balanced”.
All eyes will now be on the forthcoming elections in Gujarat where various opinion polls suggest the ruling BJP and the Opposition party Congress are in a neck-to-neck race. The outcome may have implications on the government policies ahead.
Globally, Asian shares held close to a two-month low as softer oil and copper as well as US policy uncertainty kept sentiment in check, while high-tech stocks struggled to recover after a searing sell-off.