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Markets have started the trading session on a flat note with positive bias ahead of the Reserve Bank of India's (RBI's) mid-quarter monetary policy review today.
By 9:30, the Sensex was higher by 52 points at 20,664 mark and the Nifty has gained by 17 points at 6,156 levels.
Most analysts expect the central bank to lift the repo rate by 25 basis points to 8%, its third consecutive rate hike, after both consumer and wholesale prices surged last month.
Today's parliament session will also be focus on Tuesday after a parliamentary panel endorsed passing a bill that seeks to keep political parties out of the Right to Information (RTI) Act's purview. Amendments to Lokpal bill and Lokayuktas Bill 2011 will also be taken up by the Lok Sabha. The Rajya Sabha will take up Second Supplementary Demands for Grants.
On the global front, US stocks closed slightly lower on Tuesday, with investors reluctant to make big bets before the results of a Federal Reserve meeting that could give some clarity as to when the central bank will begin trimming its stimulus.
The policy-setting Federal Open Market Committee is expected to issue a statement on Wednesday at the meeting's conclusion. While the Fed isn't expected to start winding down its purchases of $85 billion a month in bonds until March, recent stronger-than-expected economic data increased the odds that tapering could occur sooner.
Asian shares were tentative on Wednesday as investors waited with bated breath to hear when the US Federal Reserve will begin unwinding its massive stimulus, a major driver for global risk assets in recent years.
On Tuesday, a better-than-expected report on US house builder confidence and inflation data suggesting low but stable price growth supported the view that economic conditions are adequate for the US central bank to start scaling back its $85 billion-monthly bond-purchases.
Foreign institutional investors (FIIs) were net buyers of Indian shares worth Rs 249.93 crore on Tuesday, shows provisional data from the exchanges.
On the sectoral front, BSE Capital Goods, Oil & Gas and Healthcare indices have gained by nearly 1% each. BSE Bankex is trading marginally lower.
Interest rate sensitive auto, bank and realty stocks are in focus ahead of the Reserve Bank of India's (RBI) mid-quarter monetary policy review today, 18 December 2013.
Expectations are high for a rise in overnight borrowing rates for banks in the outcome of Wednesday’s monetary policy review.
The Street expects the RBI to raise the repo rate (for short-term borrowing by banks from it) by 25 basis points (bps), the Marginal standing facility (MSF, for overnight borrowing) might also be raised by 25 bps, to maintain the current spread between the two, of 100 bps.
The main gainers on the Sensex at this hour include BHEL, ONGC, Tata Power, GAIL and L&T, all gaining by nearly 1% each.
On the losing side, Jindal Steel, ICICI Bank, HDFC Bank, M&M and Infosys have fallen between 0.2-1%.
Among other shares, PTC India Financial Services rose 3.09% to Rs 12.34 at 9:16 IST on BSE after the company said it has divested its entire stake of 16.76% in Meenakshi Energy for a consideration of Rs 209.73 crore.
The broader markets are trading positive- BSE Midcap and Smallcap indices are up between 0.1-0.5%.
The market breadth in BSE remains positive with 569 shares advancing and 230 shares declining.
