NEW DELHI: Snapping five straight days of gains, Indian stock indices declined marginally this morning ahead of the Reserve Bank of India's monetary policy meeting.
The three-day monetary policy review will commence today. It is very much likely that the RBI will raise interest rates, investors will, however, keenly track the degree of such rise for fresh investment cues.
At 9.44 am, Sensex traded at 57,954.84 points, down 181.52 points or 0.31 per cent, and Nifty traded at 17,283.55 points, down 61.90 points or 0.36 per cent.
Among the Nifty 50 stocks, 39 were in the red and the rest 11 in the green, National Stock Exchange data showed.
"FIIs turning buyers, short covering by the bears and active retail participation has led to 14 per cent recovery in Nifty from the June lows. This has pushed the market to overbought territory but a continuation of FII buying may impart resilience to the market," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
However, investors should exercise caution since the global growth slowdown is serious and this has the potential to impact exports from emerging markets like India, Vijayakumar added.
Barring today's marginal decline, Indian stock markets had been in the positive territory on account of return in foreign portfolio investors after multiple months as well as inflation seemingly plateauing.
Notably, the Indian stocks recorded their best weekly performance during the week to July 22 marking its best week since February 2021, supported by renewed buying, especially in banking and IT stocks, among others.
During the past two weeks, Sensex and Nifty rose over 7 per cent on a cumulative basis.
Foreign portfolio investors becoming net buyers in Indian stock markets again after nine long months might have supported the investors' sentiment.
In July, FPIs bought equities worth Rs 4,989 crore and became net buyers after nine months, National Securities Depository (NSDL) data showed.
Tightening of monetary policy in advanced economies including rising demand for dollar-denominated commodities, and strength in the US dollar had triggered a consistent outflow of funds from Indian markets. Investors typically prefer stable markets in times of high market uncertainty.
Further, consistent depreciation of the rupee as well as depleting Indian foreign exchange reserves too had a bearing on the weak market sentiments.