Markets await RBI meet for direction

Buoyed by the fall in crude oil prices, recovery in rupee, Q4 growth at 7.7 per cent, auto sales numbers and easing of political tensions in Italy, the markets ended the week with modest gains.

The S& P BSE Sensex closed at 35,227, up by 302 points or 0.87 per cent while the NSE Nifty closed at 10,696, higher by 91 points or 0.86 per cent.

Broader market continued to under perform as markets turned nervous and hesitant.

The Monetary Policy Committee will announce its policy rate decision on Wednesday, June 6.

Analysts predict that RBI is likely to maintain status quo.

However, the commentary is expected to be hawkish with some guidance on interest rate hikes as retail inflation has been inching up; monsoon progress and crude oil prices movement will cast shadow on any decision.

The government has budgeted a monthly runrate of ` 1.06 trillion for GST in FY19, ~ 18% higher than in FY18. In the first two months of FY19, however, the average monthly GST collection was ` 987 billion — significantly short of the target.

Ahead of the 2019 polls, losses suffered by BJP have opened the possibility that BJP is not invincible and "game is open" for 2019 general elections.

The near- term trend will be dictated by the Reserve Bank’s policy meeting, progress of monsoon, domestic macro economic data, FII and DII activity, the movement of rupee against the dollar, crude oil price movement and global cues.

For the week ahead, chartists predict trading range of 34,700- 35,750 and 10,500- 10,875 for the benchmark indices.