RBI interest rate decision, global trends to drive markets this week: Analysts

The domestic stock market could face volatility amid the monthly derivatives expiry scheduled for this week while investors would mainly await the outcome of Friday’s RBI interest rate decision, analysts said.

Global market action would continue to drive sentiment amid a bearish trend following rate hikes by the US Federal Reserve and other central banks.

The Reserve Bank of India (RBI) could be guided by its global counterparts to hike interest rates for a fourth consecutive day in a bid to control inflation.

The RBI, which has hiked the short-term lending (repo) rate by 140 basis points (bps) since May, may target another 50 basis-point hike to take it to a three-year high of 5.9 percent, experts say.

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Vinod Nair, head of research at Geojit Financial Services, said investors will be eagerly awaiting the outcome of RBI monetary policy on September 30 for the week ahead.

“We expect market direction to be determined by global developments and the actions of FIIs (Foreign Institutional Investors),” Nair added.

Domestic benchmark indices showed a bearish trend last week amid a global sell-off in equity markets.

“Global signals are expected to continue to dominate this week, but RBI policy and F&O phasing out in September will cause volatility in our market. US GDP numbers will matter,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Markets are also being guided by the rupee’s action, which broke through 81 for the first time against the US dollar on Friday.

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“We expect volatility to remain high as we have key events such as MPC’s monetary policy review and derivatives monthly expiry later in the week. In addition, prevailing pressures in global indices would continue to weigh on sentiment,” said Ajit Mishra, VP – Research, Religare Broking Ltd.

Apurva Sheth, head of market perspectives at Samco Securities, said the much-anticipated U.S. GDP growth numbers will be closely scrutinized by global markets.

“The outcome of the RBI MPC meeting will be the main topic of discussion at home,” he added.

Last week, the Sensex lost 741.87 points, or 1.26 percent, while the Nifty lost 203.50 points, or 1.16 percent.

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Deepak Jasani, Head of Retail Research, HDFC Securities, said Indian markets have fallen for the second consecutive week amid a global sell-off as investors sought to align with a tighter monetary regime even as the rupee’s slide threatened to impact the positive foreign currency has been flowing into the domestic market since July.

“India would continue to take cues from the global front as well as the upcoming RBI meeting,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

This story was published from a wire agency feed with no changes to the text.

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