The week ahead

The RBI policy meeting is the main event that’s awaited by the markets. There is so much expectation in the meeting to be held on May 3rd that, the last week’s close at 1.5% higher was largely based on hopes of rate cuts. The other factors that helped the market sentiment to stay positive were renewed buying interest shown by FIIs and of course, new hopes of GDP growth.

The first three days of May are news heavy which may impact market movements. Hence it is better to be cautious. The US federal meet is on 1st May which will decide the interest rates in US. ECB meets on 2nd May and the RBI meets on 3rd to take decisions on interest rates. The other factors which may have an impact on markets are the Auto sales numbers for March which will be revealed from Wednesday and quarterly results of some big companies such as ACC, Airtel and Hindustan Unilever.

One point to note is that the markets have already discounted 25 basis points of rate cut. Banking stocks have already moved up sharply and hence, traders opting to enter banking stocks now should realize that their positions are no safe bets.

May 1st being a holiday for Indian markets, this week will have only 4 trading days. Given the scenario, we assume that trading activity will be less ahead of the RBI meet. We expect some profit booking once these events are over.

For the week ahead, we expect the Sensex and the nifty to trade in a range of 19000-19500 and 5750-5950 respectively.

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