Outcome of events to dictate trend

A lot of events are scheduled in the forthcoming week, which is expected to swing the market either ways.

The first and the most significant of those is the Reserve Bank of India (RBI)’s monetary policy. The central bank is expected to hold interest rates steady at its policy review on Tuesday (24 April), although analysts say tightening is not over yet and may decide to take steps to curb capital inflows that have been driving up the rupee. The central bank will also set out its forecasts for the year, including inflation and growth.

Prior to this, it has already raised the reserve requirement for banks three times since December 2006 and raised its main lending rate five times since early-June 2006, to try and curb credit growth as well as inflation.

Price rise had been a cause of concern for quite a while now. Inspite of taking several measures to rein in prices, the government has not been able to bring it down. The wholesale price index rose 6.09% in the 12 months to 7 April 2007, higher than previous week's increase of 5.74%, latest set of data released showed on Friday (20 April). The annual rate had moderated to below 6%, recently, after hitting 6.69% on 27 January 2007, its highest in more than two years, on the back of Reserve Bank of India (RBI) tightening policy and the government cutting duties on a range of items to rein in prices.

Also, acute volatility is expected ahead of expiry of the April 2007 derivatives contracts on Thursday (26 April 2007).

A lot will also depend on how the global markets pan out. Over a past few months, local bourses have been tracking global cues in the similar direction. Any sharp correction will lead to a fall here as well.

Heavyweights Reliance Industries (RIL) announces its Q4 results on 26 April 2007, while Ranbaxy laboratories will declare its earnings on 27 April 2007 and Maruti Udyog on 24 April 2007.

Meanwhile, crude oil rose above $66 a barrel, supported by concern that week-end elections in Nigeria increased the risk to supply from the world's eighth-largest exporter. Any sharp rise from here will dampen the sentiment.