Domestic markets are likely to begin the fresh week on dull note, amidst weak global cues. Analysts expect the selling by foreign portfolio investors to continue, albet with lesser intensity.
RBI meet postponed
Domestically, the upcoming RBI meet will be crucially watched. The RBI Monetary Policy, which was scheduled to open today but got postponed to February 8. The Reserve Bank of India on Sunday announced rescheduling the meeting of rate-setting Monetary Policy Committee (MPC) by a day in view of Maharashtra declaring public holiday on February 7 to mourn death of Bharat Ratna legendary singer Lata Mangehkar.
The MPC meeting was scheduled for February 7-9, 2022. With the postponement, the meeting will now begin on February 8 and the outcome would be announced on February 10.
RBI to change in stance?
Analysts, however, expect that this time RBI will change its stance from "accommodative" policy to "Inflation control".
Arvind Chari, CIO , Quantum Advisors, said with the government well and truly accepting the mantle of reviving growth, the RBI no longer needs to prioritise growth over inflation. Their current stance of ‘accommodative policy for as long as necessary to revive growth’ needs to be changed. "Given that the economy has recovered and does not need lower rates or higher liquidity, the MPC should change its monetary policy stance to Neutral. With oil prices above $90/barrrel and threatening to go higher, it should also mention that the MPC would now incrementally prioritise inflation and that the RBI should worry about financial stability over growth revival.
As majority of the companies announced their Q3 results, which are mixed, experts believe, the short-term market trend will be dictated by global cues.
SGX Nifty rules weak
SGX Nifty indicates that Nifty is likely to open about 80 points down. SGX Nifty is currently ruling at 17460 (730 am). Nifty futures on Friday closed at 17,529.65. Asian stocks are down between 0.3 and 0.8 per cent in early deal on Monday. All the three major US index futures are down marginally.
Ajit Mishra, VP Research. Religare Broking, said: Markets have been witnessing volatile swings, mirroring their global counterparts and it may continue in near future. Besides, the upcoming event i.e. MPC’s monetary policy review and earnings would further add to the choppiness, he added.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services , said: "In February, up to 4th, FIIs have sold equity worth Rs 3246 cr as per NSDL data. This marks continuation of their selling strategy which began aggressively in October 2021. In January this year FIIs sold equity worth Rs 33,138 crore. They sold heavily in banks and IT and were buyers in metals. Going forward, FII's market strategy is likely to be influenced by global cues, particularly the Fed's policy."
Ajit Mishra further added: "We have been seeing consolidation in the index for the last 3 months and indications are in the favour of prevailing bias to extend. We thus recommend focusing on sector-specific opportunities while keeping a check on leveraged positions. On the benchmark front, Nifty may find support at 17,350 and 17,000 levels in case the profit taking continues while the 17,850-18,000 zone would act as a hurdle.