RBI, RIL to set tone for 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 will continue the winning streak for the fourth week on 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 told PTI.

The coming week will be action-packed as the market will be closely watching the RBI policy announcement and the first quarter numbers of the Sensex heavyweight Reliance Industries, both of which are slated 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 more than 25 basis points is likely to be a dampener for the markets, it said, adding the market has 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.
    
According to analysts, another key factor will be the monthly F&O settlement due Thursday, which is likely to be volatile.
     
Besides, global cues are likely to be positive at least in the early part of the week as the result of the stress tests of European banks has come out without any shocks, say analysts. Following the stress tests, wherein only seven out of the 91 European banks failed, the US and European markets closed in the green on Friday.
   
The domestic market maintained the upward march and regained the 18,000 level after 30 months on the back of positive domestic sentiment and strong global cues.
    
The positive momentum during the last three days of the week helped both indices to close at their highest levels since early February 2008. On a week-on-week basis, the BSE Sensex rose by nearly 1 per cent to close at 18,131.
This was visible in the foreign fund flows too. Overseas investors have infused over Rs 10,000 crore (USD 2.1 billion) so far this month into domestic stocks and analysts believe the inflow will continue.
    
"FIIs are bullish about the India growth story and they will infuse more money in the coming weeks as well," Bonanza Portfolio assistant vice-president Avinash Gupta said.