The outcome of the Reserve Bank of India’s ( RBI ) monetary policy will determine the direction of the markets in the days ahead. As Dalal Street forecasts a 25-bps interest rate cut by the central bank on Tuesday, markets could decline if the easing is just in line with expectations or below. More importantly, investors will watch the commentary to gain insights into future rate cuts and liquidity. Once the action around the monetary policy subsides, investors will shift focus to fourth quarter corporate results Benchmark indices gained 6-7% in March partly on expectations of a rate cut after the government maintained a stiff fiscal deficit target in the Budget. The Sensex closed at 25301.70 and the Nifty ended at 7718.05 on Friday.
Another factor that will drive the markets will be the results season that will kick off soon. “The earnings season is around the corner and one shall start building positions in the stocks that are likely to deliver strong PAT growth,” said Vivek Mahajan, head of research at Aditya Birla Money. “One should be very cautious and only buy quality stocks with a steady earnings trajectory in a staggered manner from from medium to long term perspective.”