The Indian equity benchmarks edged lower ahead of the Reserve Bank of India's monetary policy decision amid weak global cues. The Sensex fell as much as 263 points and Nifty 50 index dropped below its important psychological level of 17,750.
As of 9:18 am, the Nifty was down 54 points or 0.32 per cent at 16,765 and Sensex declined 242 points to 56,168.
The Reserve Bank's rate-setting panel is widely expected to raise its key interest rate by 50 basis points to check inflation and improve foreign capital inflow to arrest declining value of rupee against the US dollar, analysts said.
The decision of RBI Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) is expected later today.
Meanwhile, Asian shares on Friday were headed for the worst month since the onset of the COVID-19 pandemic, while jitters in currency and bond markets persisted over hawkish talk from central banks, worries about global recession and rising geopolitical risk.
Japan's Nikkei fell 1.76 per cent, South Korea's KOSPI declined 0.52 per cent, Taiwan Weighted dropped 0.95 per cent and Hang Seng fell 0.45 per cent.
Stocks fell broadly on Wall Street on Thursday as worries about a possible recession and rising bond yields put the squeeze back on markets.
The S&P 500 fell 2.1 per cent, reaching its lowest level since late 2020. The washout erased the index’s gains in a big rally the day before. That’s when forceful moves by the Bank of England to get suddenly spiking U.K. yields under control led to a global burst of relief among investors.
The Dow Jones Industrial Average fell 1.5 per cent and the Nasdaq composite lost 2.8 per cent. The Russell 2000 index of smaller companies dropped 2.4 per cent.
Back home, brokerage firm Nirmal Bang says that Nifty has resistance around 16,970 while Bank Nifty has resistance at 37,800.
"On technical grounds, Nifty has an immediate resistance at 16,970. If Nifty closes above that, we may witness pull back rally towards 17,100/17,200 mark. On the flip side 16,720 will act as strong support levels, below that 16,600 below may be seen," brokerage firm Nirmal Bang said in a note.
"Bank Nifty’s next immediate support is around 37,400 level on the downside and on a decisive close below expect a fall to 37,240/37,100. There is an immediate resistance at 37,800/38,000 levels," the Mumbai-based brokerage added.
Ten of 15 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty IT index's 0.9 per cent fall.
Interest rate sensitive Financial Services, Private Bank, Realty, Auto and Bank indices were also trading lower ahead of RBI's interest rate decision.
On the other hand, metal, media, pharma, and healthcare shares were witnessing buying interest.
Asian Paints was top Nifty loser, the stock fell 1.5 per cent to Rs 3,334. Tata Motors, Tech Mahindra, Infosys, HDFC, TCS, Tata Steel, HDFC Bank, HDFC Life, Mahindra & Mahindra and Hindustan Unilever also fell 0.6-1.5 per cent.
On the flipside, Adani Enterprises which made entry into the Nifty 50 index from today was among the top gainers. The stock rose 1.35 per cent to Rs 3,517. Hindalco, Apollo Hospitals, ONGC, Sun Pharma, Cipla, Reliance Industries, Power Grid, UltraTech Cement and Larsen & Toubro were also among the gainers.
The overall market breadth was neutral as 1,273 shares were advancing while 1,237 were declining on the BSE.