What is your trading view for Friday, 08th October? Do you see the monetary policy impacting the markets on Friday?

On Thursday, the rally was led by specific stocks like Tata Motors, M&M and Titan which rallied on the back of expectations of stellar numbers in the forthcoming quarterly results. However, most of the PSU stocks that had led the rally recently, came under selling pressure on 07-Oct. On Friday, it would be more about credit policy signals.

Markets appeared positive on Thursday ahead of the monetary policy announcement on Friday. There are outside expectations of a 15-20 bps reverse repo rate hike, although the repo rates and the monetary stance are unlikely to change. The small impact on reverse repo will have limited impact on liquidity, which is anyways abundant in the markets.

Foreign investors sold equities worth Rs.1,764 crore while domestic funds bought stocks worth Rs.2,529 crore. The FPI caution appears to be driven by Chinese uncertainty. Global markets across the US and Europe were sharply higher by 100-150 basis points on Thursday although the SGX Nifty was tentative ahead of the monetary policy.

Not much of shift is expected in the monetary policy, although some sections in the market are alluding the possibility that the RBI could give a hawkish tone considering that the inflation remains high and crude oil threatens to keep inflation high. That is an outside risk, although action is expected more in the December policy than in the October policy.