Domestic markets will open on a flat note on Tuesday. Gift Nifty at 19,635 indicates a marginal decline of about 30 points for Nifty, as Nifty futures on Monday closed at 19,668.

Overnight, the US stocks closed on strong note. According to Edward Moya, Senior Market Analyst, at The Americas, OANDA, after a mixed jobs report (slower job growth pace but higher wages), this week is all about an inflation report that will probably show moderate price growth. 

“The focus for many traders is all about the end of tightening and this weekend’s Fed speak supported the higher for longer stance. Fed’s Bowman noted that it will likely need to raise interest rates further to bring down inflation. A New York Times article this morning reported that Fed’s Williams stated that the central bank’s work to cool the economy is almost done and that he expects rate cuts could happen next year,” he said.

Domestic market players will focus on RBI monetary policy outcome, which starts its three-day meeting today.

Palka Arora Chopra, Director, Master Capital Services, said: In the forthcoming monetary policy meeting, RBI is likely to retain interest rates at the current level for the third consecutive time. “This is due to the recent decline in the inflation rate, which has fallen below 5 per cent. However, it is anticipated that RBI might employ preventive measures in the next meeting, but there is no fundamental reason to consider a repo rate hike,” he said. 

Also, an improvement has been witnessed in liquidity post the withdrawal of ₹2,000 notes. Thus we anticipate RBI will retain the current stance on the withdrawal of accommodation. RBI’s attitude will remain cautious and will take further cues from Increase in Fed rates, he further added.

Umesh Kumar Mehta, CIO, Samco Mutual Fund, also expects a status quo from the Reserve Bank of India.

“Status quo is given in the MPC meeting this week, but the odds of interest rate hike or cut is equally poised going ahead. Global economic and inflationary environment are still not up to the mark because of renewed strengthening of crude oil prices and surge in global food prices on extreme weather conditions. Fed and RBI alike suggest a “When the Facts Change, I Change My Mind” mode. So, it is expected that going ahead only data will decide the course and fate of interest rate.”

Meanwhile, equities across Asia Pacific region are flat with most of them just managed rule above green line.

According to analysts, with result season almost getting over, only external triggers will anchor market movement. Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services Ltd, said: “Markets are likely to trade in a range ahead of RBI policy this week. FIIs continued their selling streak for the last few days, thus keeping the upside limited. We expect sector- and stock-specific actions to continue.”

Deven Mehata, Equity Research Analyst, Choice Broking, said: “Volume profile indicates Index has a strong support around 19300-19400 zone. Coming to the open interests data, on the call side, the highest OI observed at 19700 followed by 19800 strike prices while on the put side, the highest OI is at 19500 strike price. Bank Nifty has support at 44500-44600 while resistance is placed at 45200-44350 levels.”

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