RBI policy meet and macroeconomic data to guide market this week

NEW DELHI: Investors will take cues from the Reserve Bank of India (RBI) policy meet and Macroeconomic data in the holiday shortened 3 session week. The markets will remain closed on April 4 on the occasion of Mahavir Jayanti and on April 7 due to Good Friday.

The RBI will commence its 3-day monetary policy meeting on April 3, the outcome of which will be announced on April 6. The street expects that the central bank will increase the benchmark rates by 25 basis points and then pause for the rest of the year. The RBI had raised repo rate by 25 bps to 6.5% during its February 2023 meeting, the sixth rate hike in a row.

“RBI is likely to increase the repo rate by 25 basis points in order to combat rising inflation. Domestic and global macroeconomic data, the movement of the rupee against the dollar, a trend in global stock markets and crude oil prices will also impact the market in the near term. Auto stocks will be in focus as auto companies will start announcing monthly sales numbers for March,” said Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd.

“On the macro front, S&P Global Manufacturing PMI and S&P Global Services PMI for March will be declared in the coming days. The US economy grew at a slower pace with Inflation-adjusted GDP for the fourth quarter of 2022 dipping slightly lower to 2.6%,” added Singh.

According to Singh, initial bias seems to have turned sideways higher as prices crossed above their physiological mark of 17000 for Nifty and 21-day EMA. ‘Buy the dip’ will remain in favor and any correctional fall close to 17200-17150 will provide an opportunity to build fresh long positions, he said.

Indian equity benchmarks on Friday posted the biggest single-day gains for the first time in nearly a month to close at a three-week high. BSE Sensex closed  gaining over 1000 points while Nifty 50 ended in green above 17,300. On a weekly basis, the headline indices ended three weeks of declines to rise the most in eight months since mid-July.

Vinod Nair, Head of Research at Geojit Financial services, said, that the cautious sentiment of investors due to the continued stress in the US and European financial systems resulted in a slow start to the week. However, the home market managed to draw a positive close to the financial year due to the fading fear of contagion.

“The RBI is expected to raise rates by 25bps. Meanwhile, in the US, the release of personal consumption expenditures data is awaited, as it is a crucial indicator for forecasting the Federal Reserve's future actions,” added Nair.