RBI policy to frame market movement coming week : Amrapali Aadya

Mr. Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments:

Week began following the strong buying across FMCG, auto and consumer durables stocks. Further, positivity added after the early arrival of monsoon and expectation of implementation of GST on the timely data i.e. 1st of July. However, moving further market enter in to the volatility ahead of fourth quarter GDP number. Going against the general consensus of GDP number, Central Statistics Office reported contraction in GDP number for the fourth quarter, i.e. stood around 6.1%, way below the expectation of 7.1%. Apart from the market also sense pressure after getting the cues of Reserve Bank may keep key rates unchanged in its policy review due next week. Shrugging all the worries of GDP market again cheered followed by sustained buying in global market and expectation of good monsoon rains as well as favorable macroeconomic environment. Rally further intensified after receiving the optimism from Moody's report about India. As per the report, steps taken by the Modi government such as policy reforms like implementation of GST and resolution of sticky loans, may improve the country's credit profile going ahead. Overall, market closes the week on the positive note.

Coming week is likely to remain eventful as important macroeconomic data like Service PMI is due in on Monday and we expect it to come on the higher side. Apart from that, most significant event i.e. RBI monetary policy is due on Wednesday where before announcement of Q4 GDP data, expectation of it to remain non-event was high. But after poor GDP number, it will be interesting to watch how RBI will take the call to revive the economy. Apart from the US non-farm payroll data, which is due today evening will also throw the US Fed move on the future rate hike. Auto companies have reported better monthly auto sales number. Apart from that, quarterly numbers have been better than expected. Hence, we believe market to remain volatile with positive biasness ahead of RBI monetary policy. We advise investors to make their position in Agricultural , fertilizers and rural focused stocks.

It was the second consecutive week for the market to trade higher reaching yet another milestone as nifty spot touched another fresh all time high of 9673.50 and Sensex touched an all time high if 31319 last week. Market is moving gradually higher and entered into overbought zone recently which is a sign of caution in trading at the present levels. Although the GDP data was not in line with the market expectations but still the index have not reacted to the released numbers. For the next week a note of cautious should be there and traders should not take blind long positions. Charts have not shown any sign of reversal from here so one can expected near upper levels near 9700-9720 on the higher side and then traders can expect some downside due to profit taking which is highly likely at these higher levels.

Source : Equity Bulls

Keywords