Markets to make a soft start; RBI’s policy decision eyed

The Indian markets despite a choppy trade posted gains in last session and the benchmarks ended at record closing highs ahead of the Reserve Bank of India's monetary policy review. Today, the start is likely to be cautious and somber, tailing weak global cues. All eyes will be on the Reserve Bank of India at its first bi-monthly monetary policy review of this fiscal, though general expectation are that it will keep interest rates unchanged, in view of inflation numbers but its statement will eyed. Meanwhile, global credit rating agency Crisil in its latest report has said that CPI inflation is likely to average higher at 5 percent in the current fiscal on expectations of increasing pressure on food prices as well as uptick in global oil and commodity rates. There will be negative reaction to a Sebi survey that more than 95 per cent Indian households prefer to park their money in bank deposits, while less than 10 per cent opt for investing in mutual funds or stocks. Some support to the markets can come with Finance Minister Arun Jaitley presenting the much-awaited Goods and Services Tax (GST) Bill for discussion and passage in Rajya Sabha on Wednesday. There will be some buzz in the steel sector stocks, as the Ministry of Steel is going to rank non-integrated secondary steel producers. The ranking will draw inspiration from the Smart City ranking approach that takes into account multiple factors.

The US markets closed marginally in red in the last session, though the major bourses traded with strength for most part of the day but came under pressure in afternoon trading, following the release of the minutes of the Federal Reserve's latest monetary policy meeting, which revealed the central bank is ready to start shrinking their $4.5 trillion balance sheet this year. The Asian markets have made a soft start and many of the indices are down by over half a percent led by the Japanese market which is down by over a percent as the yen strengthened against dollar.

Back home, Indian stock markets sustained the joy of closing in the positive territory for the second successive session on Wednesday after the frontline equity gained around quarter percent and settled at record closing highs. Sentiments got some support after government exceeded the tax collection estimates for 2016-17 fiscal at Rs 17.10 lakh crore, indicating that it should be able to meet the fiscal deficit target for the year. While direct tax mop-up during the April-March period grew 14.2% at Rs 8.47 lakh crore, indirect tax kitty swelled by 22% over last year to Rs 8.63 lakh crore. Some support also came with the report that department of Industrial Policy and Promotion (DIPP) and global think-tank OECD are jointly organising a seminar in Delhi to assess India's FDI regime and find ways to further improve the ease of doing business. The international seminar will also analyse the business climate in the country. However, many market participants remained on the sidelines and refrained from any buying activity ahead of the Reserve Bank of India's monetary policy statement due tomorrow. Rising interest rate in the US provides sufficient indication that benchmark policy rate of RBI is not going to go down but may increase in the future depending on domestic and external factors. However, investors are expecting the RBI to announce measures to absorb liquidity that has accumulated post demonetisation. Central bank Governor Urjit Patel in his last policy review on February 8 had kept the key interest rate on hold at 6.25%. Meanwhile, IT stocks came under pressure on the report that Trump administration has issued a stern warning to companies not to discriminate against American workers by misusing the H-1B work visas programme. In a fresh blow to Indian software professionals, the Trump administration has also moved to bar entry-level programmers from the H-1B visa programme. The BSE Sensex touched a high and a low of 30007.48 and 29817.69, respectively and there were 18 stocks on gainers side as against 12 stocks on the losers side on the index.