Events begin, caution sets in

The RBI is likely to hike policy rates for the sixth time in a bid to contain high inflation. But, since the markets are prepared for the move, it may not have a material impact. What the RBI officials say will be followed closely.



Time is that quality of nature which keeps events from happening all at once. Lately it doesn't seem to be working. -Anonymous.

Monday’s gains are unlikely to rollover at least at start though the overall undertone remains cautiously optimistic. Strong earnings from a few index bellwethers have lifted the mood of late. So, corporate results will continue to drive the sentiment.

The RBI is likely to hike policy rates for the sixth time in a bid to contain high inflation. But, since the markets are prepared for the move, it may not have a material impact. What the RBI officials say will be followed closely.

US mid-term elections are scheduled for Tuesday and could change the balance of power in Washington. The two-day FOMC meet also starts today but the outcome will be available only on Wednesday.

Coal India listing is slated for Thursday before the Diwali holiday. As usual, there will be ‘Mahurat Trading’ on Friday. If all goes well, the main indices could head higher. The Nifty is likely to find support in the 5950-6100 zone; resistance is expected between 6200 and 6300.

The Reserve Bank of Australia will announce its decision on interest rates today. The Bank of England (BOE) and the ECB will review their monetary policies on Thursday while the Bank of Japan will take it up on Friday. The monthly US jobs data on Friday will also be a key event to watch out for.

Economic statistics have been erratic of late and will make it tough for the RBI to take a call on policy rates on Tuesday. Though food inflation has dipped the data on six key infrastructure industries doesn’t inspire much confidence.The IIP data in the past three months have been fairly unpredictable as well.

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FII inflows have been tapering off. FIIs were net buyers of Rs. 7.11bn in the cash segment on Monday (provisionally), according to the NSE web site. Local funds were net sellers of Rs. 713mn. In the F&O segment, the foreign funds were net buyers at Rs. 36.51bn on Monday.