Busy Central Bank Week Ahead

Global markets had been directionless in the beginning of last week because of a lack of cues to work upon and ahead of some crucial data points and events. There was key data released over Thursday and Friday that highlighted some improvement in Europe, increased worried over Chinese growth and some mixed data from the US. However, the markets were still not displaying drastic moves as the more crucial events stayed scheduled for this week.

The week ahead will hear commentary from central banks across the globe and also see some decisions on interest rates. The week is thus expected to be marked by volatility.

The RBI is scheduled to announce its interest rate decision and monetary policy on July 30, 2013. Interest-rate sensitive stocks saw heavy movement on Friday ahead of this meeting. This trend is expected to continue till the decision is announced.

The markets have been extremely jittery over tomorrow’s meet as we have seen some amount of monetary tightening recently in order to curb the depreciation of the rupee. Reversing the tightening, staying put or further extending the crunch are the options equally weighed upon by investors.

In the US, the FOMC is scheduled to release a statement on July 31, 2013. Although Ben Bernanke has been relatively dovish about his views lately, and is expected to continue doing so, the markets will see speculation and volatility.

The Euro-zone and UK interest rate decisions are scheduled to be announced on August 1, 2013.

With this line-up of events, it goes without saying that cues drawn from these events will determine the short term trend for the markets worldwide, including on the Indian markets.

Apart from central bank meetings, the week will see important macroeconomic data being released. This includes consumer confidence, employment and ISM manufacturing index in the US, CPI, unemployment, PMI from various parts of Europe and industrial production and manufacturing PMI in Asia.

As events and data points unfold the health and state of the economy in various parts of the world, the markets will react. One constant through the week however is going to be volatility. Expect a flat opening on the markets today. We may see some swinging of direction and indecisiveness.