Equity markets’ focus will shift to the RBI interest rate decision scheduled this week, with investors also tracking the ongoing third quarter earnings, global trends and foreign fund trading activity, for further cues, analysts said.
Brent crude oil prices and rupee-dollar movement would also drive the trends in the market.
RBI policy, whose outcome is scheduled for February 8, will be a critical domestic event, Pravesh Gour, Senior Technical Analyst, Swastika Investmart told PTI.
This week will see the release of Q3 earnings from companies such as Bharti Airtel, Hero MotoCorp, Hindalco and Mahindra & Mahindra as well as macroeconomic data from the United States.
Industrial Production data for December is scheduled to be out on Friday post market hours.
“We expect volatility to remain high this week as we have important events and data lined up. First, participants will be eyeing the outcome of the RBI policy meeting scheduled on February 8. On the economy front, IIP data will be unveiled on February 10,” PTI quoted Ajit Mishra, VP – Technical Research, Religare, as saying.
On the earnings front, major corporations like Tata Steel, Adani Ports, Ambuja Cement, Bharti Airtel, Hero Motocorp, Hindalco, Lupin and M&M will announce their numbers during the week along with several others.
In its December monetary policy review, the central bank had raised the key benchmark interest rate (repo) by 35 basis points (bps) after delivering three back-to-back increases of 50 bps.
With retail inflation showing signs of softening and the US Fed moderating the pace of increase in its benchmark interest rate, the RBI is likely to settle for a smaller 25 basis points repo rate hike in its forthcoming bi-monthly monetary policy.
Kotak Institutional Equities in a report said the global inflation environment is gradually turning benign although inflation is still well above every central bank’s target. Inflation will likely moderate further in the next few months, leading to the end of the rate hiking cycle by the first half of 2023 and possible rate cuts in late-2023/early-2024.
Since May last year, the RBI has increased the short-term lending rate by 225 basis points to contain inflation, mostly driven by external factors, especially global supply chain disruption following the Russia-Ukraine war outbreak.
For the week ended February 3, the 30-share BSE benchmark jumped 1,510.98 points or 2.54 per cent.
Recently speaking at the 22nd FIMMDA-PDAI Annual Conference, RBI Governor Shaktikanta Das said that with some ebbing of COVID-related restrictions and cooling of inflation in various countries, though still elevated, central banks have started what appears to be a pivot towards lower rate hikes or pauses.
(With inputs from PTI)
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