Equity markets are expected to sustain the gains at open. Gift Nifty at 23,310 signals a marginal gain of about 50 points at open. However, analysts expect the market to remain volatile and remain under pressure given the unabated selling by foreign portfolio investors. 

Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, said: positive domestic factors include a decline in retail inflation to a four-month low of 5.2 per cent, IIP growth improving in November 2024 to 5.17 per cent and the RBI Governor’s indication of a more flexible rupee policy, contributing to improved market sentiment. “While there is short-term relief in the market, overall weak global cues, a fall in the rupee, low earnings growth and FII outflows continue to weigh on sentiment, keeping the overall outlook cautious,” he added.

Vikram Kasat, Head – Advisory, PL Capital – Prabhudas Lilladher, said: Indian equity markets snapped their four-day losing streak and ended in the green on Tuesday. However, the rupee hit a record low, driven by concerns over domestic earnings and strength in the dollar index. India’s inflation eased to a four-month low of 5.22 per cent, offering some relief to markets.

“Looking ahead, the Union Budget will arrive at a critical moment, with GDP growth expected to slow to 6.4 per cent in FY25, marking the weakest pace in four years. Policymakers will need to implement strategic measures to stimulate growth and attract sustained FII inflows. These inflows will depend on clarity around fiscal targets, capital expenditure plans, and the tax relief for the middle class in the coming months,” he added.

Meanwhile, Asian stocks are down marginally in early trading, except Korea that has eked out marginal gains.

Mandar Bhojane, Research Analyst, Choice Broking, said the India VIX index declined by 3.30 per cent to 15.4700, signalling reduced market volatility and cautious sentiment among traders. Open interest data indicates strong resistance at the 23,400 and 23,500 strike prices on the call side, while the put side saw significant positions at the 23,000 and 22,900 levels, marking these as key support zones, he said, adding: “The market’s near-term direction will depend on whether the index decisively breaches the identified resistance or support levels, with traders closely monitoring the price movement around these critical zones.”