Countdown begins for RBI policy announcement

RBI policy announcement due on Tuesday  has been preceded by a promising set of numbers on the GDP front. The GDP numbers suggest consumption led growth in the economy and Inflation data suggests that the retail inflation is inching up. Inflation data has revealed that the food prices are going up and the core inflation is slightly higher than expected. With steady GDP data and inflation being higher, market is already discounting that policy rates may not be reduced and status quo may be maintained on the interest rate front. 

Even as media reports suggest there is a good possibility of excess monsoon, the excess monsoon may not be good as it may damage the crops. RBI in all possibility would like to wait for the monsoon to pan out and see its effect before deciding anything major.

Markets will be keenly tracking the Governor's comment on the liquidity front even as the rate cut news is being discounted. Market players should also watch out for the quantitative easing policy and RBI's comments on the same.

Tuesday promises to be an action packed day even as the market is almost sure that there will be no rate cut as everyone would be watching the Q&A session post RBI announcement, expecting a response  on the million dollar question related to RBI Governor's extension for the second term.