Markets May Open Sideways

The Indian markets may open sideways over the mixed global cues on Monday. The Indian equities may remain volatile over the upcoming RBI monetary policy. There is no clarity on whether RBI would go for rate cut or not and till there is no clear indication of the same, volatility with no clear direction will be persistent.

On Friday, the US markets closed in positive. US markets are now expecting positive moves by the Federal Reserve again to boast the economy. On Friday, according to the data published by US Commerce department, US economy grew by 1.5% between April to June quarter. Though this is at the lower pace, it is above the market expectations which also mean that the US economy is showing slowdown but not dipping in recession again.

On the US earnings front, after Facebook reported lower than expected earnings in the US, there are fears of the collapse of the internet stocks worldwide. Though there is no pure internet based company in India, one needs note that the social media network is widely used on Mobile platform which requires heavy internet data usage. The decline in the trend will have some impact on the earnings of the mobile operators.

In Europe, Spain has admitted that it needs a bailout. In the last week there were fears that Spain is approaching bailout while Greece was near to the exit from the Euro Zone. According to the news articles Spain will meet Germany's Bundesbank officials in this week which will give some indications to the European markets. Earlier ECB president, Mario Draghi has said that ECB will do whatever possible for the integration of the Euro Zone.

In this week ECB and Federal Reserve are set to meet due to which markets expect some easing of the monetary policy form both of them in the respective geo political areas.

On the domestic front, the markets may volatile as RBI will come with monetary policy on Tuesday. The inflation remains as high as 7.25%, however it has also shown some declining trend as per recent data. The threshold limit as per RBI remains 5% and hence there would be ‘Status Quo’. RBI however may surprise the markets with the rate cut if it decides to follow the suite of its peer central banks in the Europe, England and China.

In conclusion we at Dalal Street Investment Journal, expect the markets to open sideways and remain volatile head of the RBI Meet.