RBI policy to steer Indian stock markets; RIL, Nestle India, Vedanta in focus

MUMBAI: Indian stock markets will take directional cues from the Reserve Bank of India’s monetary policy statement on Wednesday, while SGX Nifty futures suggest a positive opening for domestic benchmark indices. 

On Tuesday, the BSE Sensex ended at 57,633.65, up 886.51 points or 1.56% and the Nifty was at 17,145.85, up 233.60 points or 1.38%.

The central bank is widely expected to keep interest rates intact while its commentary on inflation and growth amid the emergence of the Omicron variant of covid-19 will be monitored by investors.

Petchem major Reliance Industries Ltd (RIL) has formed a $2 billion partnership with Abu Dhabi Chemicals Derivatives Company RSC Ltd (Ta’ziz) for chemical production, the company said on Tuesday. The joint venture will construct and operate a chlor-alkali, ethylene dichloride (EDC) and polyvinyl chloride (PVC) production facility, with an investment of more than $2 billion.

FMCG major Nestle India has said it has received approval from the government for the production-linked incentive (PLI) scheme for processed fruits and vegetables.

Hindustan Zinc Ltd announced a total $1 billion as interim dividend to its shareholders. The firm said its board approved a dividend of 18 a share — implying a dividend yield of 5.09% to its closing price as on 7 December.

Asian shares extended gains on Wednesday, continuing a global relief rally as markets found positive news in early reports about the potential impact of the Omicron variant, although overnight advances in oil prices began to peter out.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% and Japan’s Nikkei rose 1%. US S&P 500 futures rose 0.25%.

British drugmaker GSK said its antibody-based covid-19 therapy with US partner Vir Biotechnology is effective against all mutations of the new Omicron coronavirus variant.

Also, a South African study on Tuesday suggested that booster doses of the covid-19 vaccine produced by Pfizer Inc and partner BioNTech’s could help to fend off infection from Omicron, even as it showed that the new strain can partially evade the protection from two vaccine doses.

Those reports helped MSCI’s all-country world index to close 2.1% higher on Tuesday, in its biggest percentage gain since November 2020. Oil also rose over 3%.

Markets are also focused on US CPI data, due Friday, with a higher reading likely to point policy makers towards accelerating the tapering of the Federal Reserve’s massive bond buying programme which has put a floor under equity prices since the start of the pandemic.

Last week Fed Chair Jerome Powell said it might be time to stop seeing inflation as transitory and hinted the Fed might speed up tapering. That ought to support the dollar, particularly against other currencies with more dovish central banks.

On Wednesday, the greenback was little changed against a basket of six major peers , although the Australian dollar extended its overnight gains to $0.7122, its highest in a week, having fallen to a 13-month low due to worries about Omicron and a comparatively dovish central bank FRX.

The benchmark US 10-year Treasury yield edged a little lower on Wednesday, but after two days of gains on better news about Omicron.

US crude dipped 0.45% to $71.79 a barrel. Brent crude fell 0.44% to $75.11 per barrel.

Spot gold rose 0.3% to $1,789 an ounce, within its recent range, and rival inflation hedge, bitcoin was also calm after an exciting weekend, barely changed at $50,600.

(Reuters contributed to the story)

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