Positive start likely; RBI’s move eyed

It expected to be a positive start on the Dalal Street on account of strong global indices.

Headlines for the day:

RBI signals series of rate hikes to tackle inflation

L&T restructures with ideas from peers

Mahindra buys stake in East India Company



Events for the day:

Major corporate action

RBI's third-quarter policy review
SRS Real Infrastructure to be listed today
Results: IDBI Bank, Hindustan Unilever, Grasim Industries, Sterlite Industries
For more events and news, log on to Sharekhan.com

Pre-market report

Indian indices

All eyes will be on the Reserve Bank of India (RBI)'s monetary policy review scheduled today. This will set the tone for the Indian markets in the near term. The market is expecting the RBI to hike repo and reverse repo rates by 25 basis points to rein in inflation. The central bank has raised its key rates six times since March of last year in a bid to tame prices and is expected to tighten further today. If it plays along on expected lines, then you might actually see a little bit of a continuation of the relief rally that one is expecting in the banks even for the market at large. However, a sharper hike could trigger some heavy selling in rate sensitive sectors and even hurt overall sentiment to a significant extent. So, today is an important event for the markets. Banking stocks will hog the limelight.

Amid a slew of earnings reports and reaction to the central bank's monetary review, the market is likely to remain quite volatile. It expected to be a positive start on the Dalal Street on account of strong global indices.

Daily trend of FII/MF investment in equities

The FIIs have purchased Indian equities worth a net of Rs37.60 crore on January 24, 2011 as against net sell of Rs834.30 crore on January 21, 2011. The domestic investors have bought Indian shares worth a net of Rs71.30 crore on January 21, 2011.

Global signals

The European shares edged up on Monday (January 24, 2011), as heavyweight miners rose on strong metals prices and defensive drugmakers and tobacco firms gained on concerns over the impact of rising inflation on growth prospects.

The Wall Street resumed its rally on Monday, led by natural resources and tech shares as investors saw stocks regaining momentum lost late last week.

The major Asian markets were trading higher with optimism ahead of earnings reports and a rebound in global equities. But, Shanghai Composite was in red. SGX Nifty was trading 22 points up, indicating to have positive start for the domestic markets.

Commodity cues

Oil fell more than 1% on Monday as ample US inventories were seen on the rise.