RBI, RIL to set tone for the Street; rally may go on

The RBI monetary policy review and Reliance results will set the tone for the Dalal Street this week, analysts said, while expressing optimism that the markets would continue the winning streak for the fourth week on the back of strengthening fund inflows.

“Investor sentiment is upbeat and the Dalal Street may see hitting new highs this week. Tracking positive global cues, the market is likely to start the week in the green on Monday,” CNI Research chairman and managing director Kishore P Ostwal said.

The coming week will be action-packed as the market will be closely watching the RBI policy announcement and the first quarter numbers of Sensex heavyweight Reliance Industries, both for Tuesday.

So far, the earnings by most of the corporates have been in line with Street expectations, brokers said, adding the market is expecting a good show by the country’s largest corporate house on July 27.

Analysts say Reliance Industries’ first quarter numbers on Tuesday will be a deciding factor for the markets and will decide the direction in the immediate short term.

According to the brokerage firm ICICIDirect, another key event is the monetary policy announcement by the Reserve Bank on Tuesday. Any hike rate rise more than 25 basis points is likely to be a dampener for the markets, it said, adding these had already factored in a 25-bps policy rate hike.

However, most marketmen say they do not see a steep hike in the key policy rates. “We expect a 25-basis points hike in the lending and borrowing (repo and reverse repo) rates in the upcoming monetary policy review by the Reserve Bank,” Birla SunLife chief investment officer Vikram Kotak said.