All Eyes On RBI Policy Announcement.

Indian equity markets witnessed another trading session when the indices witnessed a positive closing. However there was good amount of volatility in the markets with all leading indices remaining precarious. Despite good amount of volatility, trading volume was higher and this took the Sensex to 22386 levels and Nifty closed above the important 6700 levels.

While this was on the repo rate front, the GDP Growth for FY15 is another factor which needs to be seen closely. Any on the street are expecting the GDP growth for FY15 at 5%- 5.5%. To put the figures in perspective, 70 % of the brokers and fund managers are expecting a GDP growth in between 5-5.5% for FY15. The Rest expects it to be between 5.5-6%. In addition, there are expectations about CPI inflation targets being set at around 8% for the next fiscal.

The most important announcement expected today is about the Banking licenses. We had categorically stated that, clarity on the banking licenses front will boost the sentiments in the markets. All eyes will be on Dr. Rajan when he makes all important announcements today. To sum it all, markets would Remain Stable or make some positive move if RBI maintains a status quo. If Dr. Rajan cuts the repo rate by 25 basis points, we would not be surprised if the Indices zoom past 6800 levels on Nifty. However a good Amount of profit booking would happen if there is hike in repo rate.

A good amount of debate is also happening on the diesel price front as the oil marketing companies are not hiking diesel prices. This is quite opposing to the election code of conduct. And hence we expect the oil marketing companies to remain in limelight today.

Automobile companies will be announcing the sales figures for the March 2014 months. Though the automobile stocks are trading high, the sales figures are yet to pick up pace. Hence it is important to follow auto sales numbers.

On global canvas, the US markets witnessed another positive closing. The Dow closed up by 135 points (Up 0.82%). The S&P also closed with gains of 15 points (Up 0.80%). This was on the back of US Federal Chairperson Jennet Yellen vowing to support the economy and especially markets.

The Asian markets however are trading on a flat note on the back of announcement of Chinese macro data.  Chinese manufacturing indexes pointed to weakness in the world’s second-biggest economy as leaders contemplate whether to add stimulus. A Purchasing Managers’ Index fell to 48.0 in March 2014, the lowest reading since July 2013, from 48.5, HSBC Holdings Plc and Markit Economics announced today. A separate PMI from the government, with a larger sample size, was at 50.3 after 50.2 in February 2014. So the data has not been Very encouraging. The Nikkei is trading at 14805 (Down 22 points). The Shanghai Composite is trading in positive with minuscule gains.

SGX Nifty is trading with gains of 24 points at 6778. Though the SGX Nifty is trading With Significant gains, we expect the Indian equity indices to open on a flat note an remain range bound ahead of the RBI Policy announcement.