ALL EYES ON RBI

ALL EYES ON RBI

WORLD MARKETS                             

Dow and S & P 500, pressured by weakness in oil, fell 0.3% each while Nasdaq lost half a percent yesterday. 

Nymex oil fell $1.09 or 3% to $35.70 a barrel while Brent slipped 2.5% to $37.69. Iran said it would continue to increase production until it reached a favorable market position similar to that seen prior to its sanctions period.

In economic news, factory orders declined 1.7% in February.

Key European markets gained 0.3%-0.5%. Euro zone unemployment for February fell slightly to 10.3%, down from 10.4% in January, marking the lowest reading since August 2011.

AT HOME

After giving away initial gains in the first half, benchmark indices recouped all of them in the later one to end higher by about half a percent. Sensex settled at 25400, up 130 points while Nifty added 46 points to finish at 7759. BSE mid-cap and small-cap indices gained 0.2% and 0.5% respectively. BSE Telecom and Teck indices climbed 2.8% and 2.1% respectively, becoming top gainers among the sectoral indices while Realty and FMCG indices were the top losers, down 0.6% and 0.4% respectively.

Idea Cellular climbed more than 6% on news the Telecom Commission has lowered spectrum usage charge (SUC) to 3% of annual revenue for airwaves bought in the upcoming auctions, from the 5% pegged in the previous two sales.

ITC fell nearly a percent and half after the company shut down its cigarette factories on confusion over pictorial warnings.

FIIs net bought stocks and index futures worth Rs 237 cr and 97 cr respectively while net sold stock futures worth Rs 539 cr. DIIs were net sellers to the tune of Rs 334 cr.

Rupee appreciated 5 paise to end at 66.20/$.

Oil Marketing Companies hiked petrol and diesel prices by Rs 2.19 a litre and 98 paise a litre respectively.

OUTLOOK

Today morning Asian markets are trading with cuts of upto a percent and half with Nikkei leading the losses and SGX Nifty is suggesting about 50 points lower opening for our market.

For past couple of sessions we have been mentioning that 7770, in the vicinity of which 34-week moving average is placed, is the key hurdle to eye, a crossover of which is required for fresh upmove. That continues to be the view. A crossover of 7770 would pave the way for the further upside till about 7890, where the 200-DMA is placed.

On the way down, 7666 continues to be immediate support below which 7580 would be important support to eye.

Key event to watch out today would be RBI's first monetary policy review of the new fiscal. While a repo rate cut of at least 25 bps is expected, the tone of the policy will be equally important. A 25 bps cuts along with dovish commentary will be taken positively while a hawkish tone can take away all the positive impact of the repo rate cut. Also important will be Governor Rajan’s comments on inflation and current liquidity tightness.