Market may remain volatile; RBI policy review eyed

The market may remain volatile next week as investors eye a slew of economic and corporate data. The Reserve Bank of India undertakes a mid-quarter policy review on Thursday, 17 March 2011. Six out of 10 economists polled by Capital Market expect 25 basis points increase in repo rate and reverse repo rate each from the Reserve Bank of India (RBI) on 17 March 2011. The rest 4 economists expect no change in policy rates.

The government will announce inflation data for the month of February 2011 on Monday, 14 March 2011. A Capital Market poll of 15 economists pegs headline inflation at 7.8% in February 2011. The headline inflation eased slightly in January on some moderation in manufactured products. The wholesale price index (WPI), India's main inflation gauge, rose 8.23% in January from a year earlier. The index had risen 8.43% in December 2010.

Though crude oil prices have retraced from 29-month highs hit recently, they still remain high with US crude holding above $100 a barrel. High crude oil prices remain a cause for concern for India which imports majority of its crude oil requirements.

The fourth advance tax payment installment due 15 March 2011 will provide a cue on Q4 results of individual firms. Indian corporates are required to pay advance tax in four installments based on estimated tax liability for the year under review.