Indian equity markets are expected to open flat on Wednesday as investors await the Reserve Bank of India’s (RBI) monetary policy decision, with market participants anticipating a pause in interest rates and dovish guidance to counter external pressures, especially from proposed U.S. tariffs.

As of 7:04 a.m. IST, Gift Nifty futures were trading at 24,670, suggesting the Nifty 50 will open near Tuesday’s close of 24,649.55.

RBI Decision in Focus

The RBI is set to announce its policy decision at 10:00 a.m. IST, with consensus expectations pointing to a status quo on rates. This follows the central bank’s surprise 50-basis-point rate cut in June and its shift to a neutral stance.

While the RBI had earlier indicated limited room for further cuts, rising trade tensions—particularly the U.S.’s recent move to impose 25% tariffs on Indian goods—have heightened calls for a supportive monetary tone.

“In light of the proposed U.S. tariffs, markets will be looking for a dovish tone and clear reassurance on growth support,” said Gaurav Garg, analyst at Lemonn Markets Desk. “The Governor’s guidance on balancing domestic demand with external headwinds will be key.”

Markets Under Pressure Since Last Policy

Since the June 6 policy meeting, the Nifty 50 has slipped by 1.41%, pressured by weak corporate earnings and global uncertainty.

Foreign portfolio investors (FPIs) have been net sellers for 12 consecutive sessions, reacting to trade-related concerns and lackluster quarterly results. Domestic institutional investors, though also net sellers on 22 sessions during the same period, have helped absorb some of the FPI outflows.

“The sustained FPI selling was largely driven by a combination of subdued Q1 earnings, a strong U.S. dollar, and uncertainty surrounding U.S.-India trade negotiations,” said Manish Goel, Managing Director at Equentis Wealth Advisory Services. He added that outflows may persist until there is more clarity on trade policies and a pickup in corporate earnings.

Global Cues Mixed

Asian markets opened lower on Wednesday, mirroring Wall Street’s overnight decline, as investors reacted to trade tensions and weaker-than-expected economic data out of the U.S.

The market’s near-term direction now hinges on the RBI’s guidance, especially in light of rising external risks and domestic growth concerns.

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