FX.co ★ Sensex, Nifty To Open On Cautious Note; RBI Policy Outcome Eyed

India's stock markets are expected to open with caution on Friday as investors digest subdued signals from Asian markets and anticipate the Reserve Bank of India's (RBI) decision on interest rates later today. The RBI is widely anticipated to reduce its primary repurchase rate by 25 basis points to 6.25 percent, although some analysts speculate that a more aggressive reduction of 50 basis points may be on the horizon.

The market is also attentive to any potential announcements regarding additional liquidity strategies from the central bank.

On Thursday, key indices Sensex and Nifty declined by approximately 0.3 percent and 0.4 percent, respectively, triggered by the expiration of Nifty 50 weekly options. The Indian rupee depreciated by 12 paise, closing at 87.578 against the U.S. dollar, influenced by the ongoing global trade tensions and consistent outflows of foreign funds.

Foreign Institutional Investors (FIIs) continued to sell, recording net sales of Rs 3,550 crore on Thursday. Conversely, domestic institutional investors maintained their buying momentum, acquiring shares valued at Rs 2,721 crore, according to provisional data from the National Stock Exchange (NSE).

In Asia, market activities were mixed amid caution as Amazon's revenue forecast for the first quarter fell short of expectations, and as investors awaited President Donald Trump's forthcoming stance on trade restrictions, especially ahead of China's pending tariff deadline next week.

The U.S. dollar showed resilience prior to the release of the non-farm payrolls report, with expectations set for 169,000 new jobs in January and an unemployment rate holding steady at 4.1 percent.

Gold prices remained near historic highs, continuing their sixth consecutive weekly rise in response to tariff worries. Conversely, oil prices were on track for a third consecutive weekly decline due to concerns over a potential oversupply.

On Wall Street, U.S. stocks displayed mixed results in a volatile session overnight as market participants looked forward to Amazon's earnings and the latest employment data.

Economically, last week's initial jobless claims exceeded forecasts, and reports indicated a more pronounced slowdown in worker productivity growth for Q4, which consequently raised labor costs.

The tech-heavy NASDAQ Composite increased by 0.5 percent, while the S&P 500 improved by 0.4 percent, marking its third consecutive session gain. This comes as Treasury Secretary Scott Bessent reaffirmed a lower trajectory for 10-year yields under the Trump administration. However, the Dow Jones Industrial Average saw a decline of 0.3 percent.

In Europe, stocks reached unprecedented highs on Thursday as investors evaluated the Bank of England's rate cut alongside a surge of corporate earnings reports.

The pan-European STOXX 600 index advanced by 1.2 percent; meanwhile, Germany's DAX and France's CAC 40 each escalated by 1.5 percent, and the UK's FTSE 100 climbed 1.2 percent.