RBI policy, Q4 results to decided market mood this week

The stock market may undergo a phase of consolidation this week in light of the RBI's policy meet on Tuesday and the announcement of the quarterly results of various companies, including Hero Motors and Bharti Airtel.

According to experts, there is a lack of a catalyst to lift the equity market out of its current range. Investors must not get adventurous for the time being and wait for more clarity on the direction of the main indices, they said.

"Overall, the sideways consolidation pattern could persist in May also, as quite a few key companies are yet to announce their results," IIFL Head of Research (India Private Clients) Amar Ambani said.

The Bombay Stock Exchange's 30-share Sensex index fell by 466.27 points to settle at 19,135.96 in the week gone by on FII selling, mixed corporate earnings, high inflation, hardening interest rates and concerns over the 2G scam.

"The RBI credit policy and quarterly results are the major factors to determine the market trend this week. Most of the global markets are at two-year highs after the US Fed kept interest rates unchanged at 0.25% and announced a USD 600 billion treasury buy-back," Motilal Oswal Securities Associate VP Senior Analyst Technical Equities Parag Doctor said.

He said, however, that continued FII selling, fear of a hike in interest rates by the RBI and concerns over the 2G scam have created a negative sentiment in the market.

Analysts also said that investors must remain cautious as there are no major short-term triggers for the market to rise materially.

Market players also said that on May 3, the RBI is expected to raise key short-term rates again, as inflation still remains high. If the rate increase is 50 basis points, the market may look a little negative, they feared.

Bank of India will announce its Q4 results on May 2. Hero Honda Motors Q4 results will come up on May 4, followed by Bharti Airtel, Kotak Mahindra Bank and Cipla, whose results will be announced on May 5.