InvestorQ : How do you see the stock markets on 30th September ahead of the RBI policy announcement?
Tisha Malhotra made post

How do you see the stock markets on 30th September ahead of the RBI policy announcement?

diksha shah answered.
3 months ago

It was again a day of a positive and promising start but a disappointing close for the Nifty on Thursday. The Nifty started strong and stayed in the green through most of the day but by the close it lost value and closed in the red losing 41 points in the process. 17,000 continues to remain a resistance for the Nifty index and looks hard to breach for now.

Like on Wednesday, even on Thursday the selling was once again pronounced in the second half of the day as most of the traders preferred to stay light ahead of the monetary policy announcement expected by the RBI on Friday. A/D ratio was however positive at 27:23 with cement and metal stocks staging a bounce, but defensives were less than attractive.

Foreign investors remained net sellers in equities for the seventh day in succession at a level of Rs.3,599 crore while the domestic funds and LIC bought stocks worth Rs.3,162 crore on Thursday. For September till date, FPIs are net sellers to the tune of nearly Rs3,800 crore, turning the tables. It looks like September will end in the negative.

Let us now look at the global market cues. Correction and weakness was back in the US markets on Thursday. On Thursday, the Dow fell by 458 points and NASDAQ was down 314 points amidst slowdown concerns and negative Q2 growth. Europe was deep in negative while SGX Nifty is marginally down about 21 points in early trade, ahead of RBI policy.

The stock markets have already factored in a rate hike of 50 bps in the monetary policy and that would not be much of a surprise factor. However, markets would be looking for RBI commentary along with the indications of terminal repo rates that the RBI is targeting. Currently, the consensus is of RBI target terminal rate of 6%, but with 50 bps rate hike, it would almost be there; just 10 bps short. It remains to be seen if RBI chooses to remain hawkish to stem the fall in the rupee from the current levels, though 6.5% looks likely.