A rally on the cards; RBI policy eyed

Domestic stocks are likely to see a gap-up opening tracking firm Asian stocks. Trading of Nifty 50 index futures on the Singapore stock exchange indicates that the Nifty could jump 150 points at the opening bell. Traders and investors are awaiting the outcome of the Reserve Bank of India's (RBI) monetary policy meeting.

The RBI's two-day Monetary Policy Committee (MPC) meeting began yesterday, 4 April 2018 for the first bi-monthly monetary policy for 2018-2019. The resolution of the MPC will be announced at 14:30 IST today, 5 April 2018. As per reports, the central bank is likely to keep interest rates unchanged in the first monetary policy review of the current fiscal year, amid a gradual recovery in growth and easing inflation.

In its last meeting on 7 February 2018, RBI decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6%. Consequently, the reverse repo rate under the LAF was at 5.75%, and the marginal standing facility (MSF) rate and the bank rate at 6.25%.

Overseas, Asian shares were trading higher as investors welcomed signals the US and China are open to negotiations rather than escalating threatened tit-for-tat trade tariffs. Markets in mainland China, Hong Kong and Taiwan were closed for holidays.

China's tariffs would place 25% duties on major US exports to China including airplanes, autos and soybeans, covering 106 categories of products and affecting $50 billion of goods. The announcement followed plans by the Trump administration to impose tariffs of 25% on Chinese products worth $50 billion, on top of levies introduced on steel and aluminum last month. Retaliatory Chinese levies on US pork and fruit came into effect early this week.

US stocks closed sharply higher yesterday, 4 April 2018 amid heavy intraday volatility as investors speculated the likelihood of, or the potential impact from, a trade war between the United States and China.

Back home,the market declined sharply yesterday, 4 April 2018, mirroring weak global stocks, amid escalating trade war between China and the US. The Sensex fell 351.56 points or 1.05% to settle at 33,019.07, its lowest closing level since 28 March 2018.

The trading activity on that day showed that the foreign portfolio investors (FPIs) bought shares worth a net Rs 335.18 crore yesterday, 4 April 2018 as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 152.55 crore yesterday, 4 April 2018, as per provisional data.

Among corporate news,shares in interest-rate sensitive sectors such as auto, banking and realty will be in focus ahead of the Reserve Bank of India's (RBI) monetary policy decision today, 5 April 2018.

ICICI Bank will be watched. With reference to news article titled, 'SFIO awaits ministry nod to investigate ICICI-Videocon case', ICICI Bank clarified after market hours yesterday, 4 April 2018, that it has not received any communication from the Serious Fraud Investigation Office (SFIO) in the above matter.

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