Rate Cut Expectations To Strengthen Optimism Further

It was a good ending to a week that began on a rather cautious note. The markets have been riding the wave of results, most of which have been either as per, and in some cases even better than expectations. From corporate results, the focus now clearly shifts to what the RBI will do at its monetary policy review meeting tomorrow. The year had begun with expectations of a rate cut in the offing. Voices only got louder until a week ago, when the RBI Governor indirectly hinted at what most would not like to hear. Accordingly, inflationary pressures were yet to subside, and this meant no rate cuts. If this really materializes into a reality tomorrow, you know, what happens to the market.

For now, a majority firmly believes that a rate cut is surely in the offing and this has seen interest rate sensitive sectors move up over the weekend. Today could be another day of positive anticipation for the markets. With corporate results still pouring in, the RBIs meet tomorrow will set the tone for the markets over the course of the week and probably some more time to come.

Meanwhile, global cues too have been pretty encouraging. Key markets have been tracking corporate results. In the US the S&P 500 is just a little away from its all-time high. What really worries market players out there is that the market may pause and come back a bit before it breaches through that level.

So where did all this lead the Asian markets today? Japan opened on a positive note, with the Nikkei kissing past the 11000 mark for the first time in three years but slid back. A not so encouraging earnings report saw the Japanese markets pull back from their highs. Other Asian markets began trading mixed this morning with Taiwan, Singapore, Malaysia and Hong Kong trading in the green, while China and Korea along with Japan trading negative. Both these (China and Korea) however changed course over time and were seen gaining strength.

The SGX Nifty is trading marginally negative this morning. But this could mean little to the overall optimism that is currently surrounding the Indian markets. You could see the markets take off from where they ended the week and move up today. Broader indices are likely to open moderately positive and gain strength as the noise about expectations of the RBIs rate cut become louder. It is better, especially for fundamental and long term investors, to be cautious in a market like this. It could be a traders market for today working in anticipation of what is expected of tomorrow from the RBI.

Rate sensitive sectors will be the movers and shakers of the market for today. Do read the ‘Index Trends And Stocks In Action’ for today to get a better idea of how the indices are poised on technical lines for today.