Global Markets Rally Amidst Middle Eastern Tensions and Anticipated RBI Rate Decisions

All eyes are on the Reserve Bank of India‘s (RBI) monetary policy committee as it convenes on October 9, 2024. Analysts anticipate that the outcome of this meeting will be pivotal in shaping market sentiment. Benchmark indices, including the Nifty50 and Sensex, are likely to open positively as the markets eagerly await potential policy shifts. According to a Bloomberg survey of 35 economists, most expect the RBI’s six-member committee to maintain the repurchase rate at 6.5 percent, with some predictions hinting at a possible shift to a neutral monetary stance.

Meanwhile, global markets exhibit signs of recovery. Wall Street‘s benchmarks closed higher on Tuesday, as investors revisited technology stocks and prepared for upcoming inflation data and the third-quarter earnings season. The S&P 500 rose by 0.97 percent, the Nasdaq Composite climbed 1.45 percent, and the Dow Jones Industrial Average increased by 0.30 percent. However, recent imports data show a decline, with U.S. goods and services imports falling 0.9 percent in August.

Asian markets rebounded following a widespread decline the previous day, buoyed by signs of recovery from Wall Street. Japan’s Nikkei 225 rose by 1 percent, and the broader Topix index gained 0.5 percent. Australia’s S&P/ASX 200 also jumped over 0.5 percent. Additionally, the Reserve Bank of New Zealand cut its rates by 50 basis points, marking a second consecutive reduction. Notably, South Korean markets remain closed for a public holiday.

Amidst these financial updates, geopolitical tensions in the Middle East continue to escalate. Reports indicate clashes between Hezbollah militants and Israeli soldiers near the Lebanese border town of Blida. The Israel Defense Forces have not confirmed the extent of these claims. In Beirut’s southern suburb, Dahiyeh, strikes have caused significant destruction, leading to casualties and extensive property damage.

Oil prices have reacted to the geopolitical tension, with crude oil futures falling over 4 percent on Tuesday. The West Texas Intermediate November contract dropped to $73.57 per barrel, while Brent crude December contract fell to $77.18 per barrel, amid market caution over a possible response from Israel.

Elsewhere, gold prices saw a decline of over 1 percent, following positive employment data from the U.S., which dampened expectations for an aggressive rate cut. Spot gold fell to $2,615.50 per ounce, reflecting a consecutive five-session losing streak.

In advancing the Indian markets, FTSE Russell announced the inclusion of India’s sovereign bonds in its Emerging Markets Government Bond Index starting September 2025. This inclusion follows similar moves by other index providers like JP Morgan and Bloomberg, and is expected to attract significant foreign investment.

In state election updates, the Bharatiya Janata Party (BJP) retained control in Haryana, securing its best-ever vote share in the state. In Jammu and Kashmir, the National Conference emerged as the largest party after Assembly elections, marking a significant political development since the revocation of Article 370.

The previous trading session on October 8 saw foreign institutional investors selling shares worth Rs 5,729.60 crore, while domestic institutional investors purchased shares worth Rs 7,000.68 crore, leading to a recovery in Indian markets. Key institutions like Tata Consultancy Services and Reliance Industries are slated to announce their financial results, providing further insights into their fiscal health.