Flat to Positive Opening Eyed Today

Today is the most important day of the month when RBI will announce review of the monetary policy. Yesterday, RBI said that the inflation is big worry for the country. RBI has clearly said that the inflation is the focus area now which reiterates what it had said a month ago. 

Yesterday, markets rose by about 2% on the hopes that the RBI will go for rate cut and traders have taken short term positions on that basis. After the RBI comments, there may be some profit booking on the streets however some would still wait for the unexpected to come true from the Apex bank.

RBI has also said that the economy would be growing by 6.5% in this fiscal which is down from earlier estimates of 7.2%. RBI on these projections may think that there is still some growth in the economy and hence may prefer to keep the rates unchanged

Global markets are mainly mixed where US markets closed flat to negative, while European markets closed in gains. Asian markets are slowly progressing higher. The SGX Nifty is currently trading 11 points up to 5236.00

Overnight the US markets closed in red as Federal Reserve is prepared to go slow on the economic stimulus. The Fed has also said that it will keep the interest rates low until late 2014; the economists however believe that the rates will remain low until 2015. There are fears that the Fed's earlier efforts to bring the economy back on the growth traction has not resulted in any significant positive push. This is evident from the fact that the American economy has grown by 1.5%. Fed will now watch the economy and its course of growth for some weeks in order to take further steps. This however harmed the markets and all three key American markets closed in flat to negative mode.

On the Asian front too, the markets have rose on the hopes that the central banks in the key nations will go for monetary easing including a stimulus package. ECB President, Mario Draghi’s comments to do whatever possible for the integration of the Euro zone has kept the markets standing high. All three key indices are trading in gains. Shanghai after the initial negatives has come in positives and Hang Seng is trading with 0.7% gains. Japan’s Nikkei is in green with 0.51% gains. In Japan yesterday’s unemployment rate at 4.3% beat the estimates of 4.4%. Household spending grew by 1.6% which however lagged the estimated 2.9%.

In conclusion on the bag of the mixed global trend and today’s RBI meet and yesterdays RBI comments we expect the markets to show flat to positive opening.