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RBI policy to set the tone for market

Raghuram Rajan-led Reserve Bank of India’s monetary policy review on Tuesday will set the tone for the domestic bourses this week, experts said.

“Market will react to Q4 GDP data which was released post-market hours on Friday. The just concluded Q4 earnings season also indicates that economic recovery has been sluggish and H1 FY2016 could remain challenging.

“In this backdrop, coupled with the fact that inflation trajectory has remained well within RBI’s comfort zone in recent months, a rate cut on June 2 may provide some support to market sentiments,” said Hitesh Agrawal, Head Research, Reliance Securities.

India has overtaken China to become the world’s fastest growing economy by clocking 7.5 per cent growth in the March quarter, prompting Finance MinisterArun Jaitley to say that the economy is clearly on “a recovery path”.

“This week is going to be a crucial one for equity markets as participants are eyeing the RBI’s monetary policy review, which is due on Tuesday and markets are already discounting repo rate cut of 25 basis points. On macro front, HSBC manufacturing PMI and service PMI data is scheduled on June 1 and 3, respectively.

RBI Governor


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