Markets look towards RBI for direction

Enthused by bettert h a n - e x p e c t e d results, renewed buying from FIIs, good spread of monsoon and positive global cues, Indian equity markets moved back to fresh lifetime highs during the week ended.

Sensex closed 840 points higher at 37,337 and Nifty ended 268 points higher at 11,278.

After long hibernation, the broader markets outperformed the benchmark indices, with the midcap index gaining 4.7 per cent and the smallcap index gaining 4.6 per cent during the week. Quality small and mid caps can be picked based on multiple time- tested parameters.

FIIs turned net buyers in the cash segment but were seen hedging their positions by remaining net sellers in derivatives segment. DIIs turned net sellers during the week and were seen booking profits at higher levels.

With stability in rupee in the recent weeks and the moderation of oil prices, players expect the MPC to keep repo rate, the rate at which RBI lends money to commercial banks, unchanged at 6.25 per cent.

Near term trend will be dictated by decision of the Market Policy Committee on August 1, Q1 earnings, progress of monsoon, domestic macro economic data, FII and DII activity, the movement of rupee, crude oil price movement; and global cues like outcome of US Fed meet, Bank of Japan and ECB decisions on interest rate and Chinese data.

For the week ahead, chartists predict trading range of 36,750- 37,750 and 11,100- 11,425 for the benchmark indices.

Support for the benchmark indices evident at 37,000 & 36,750 and 11,180 & 11,100.