Monetary policy review to drive key equity markets

The Reserve Bank of India’s (RBI) upcoming monetary policy review, combined with the direction of foreign fund flows are expected to drive investors' sentiments in the equity markets this week.

Market observers opined that other factors such as the rupee's movement against the US dollar, global crude oil prices and further economic reforms will impact investors' risk-taking appetite.

"The RBI is scheduled to meet on December 6, 2017, and is expected to leave interest rates unchanged as inflation is inching up due to firming crude oil prices, increased financial market volatility and fiscal issues," D.K. Aggarwal, Chairman and Managing Director of SMC Investments & Advisors, told IANS. "The Nifty is expected to trade in the range of 10,000-10,300 points levels, whereas the Bank Nifty is expected to trade between 24,900-25,600 points levels." On technical levels, Deepak Jasani, Head - Retail Research, HDFC Securities, predicted a continued "shortterm downtrend" for the Nifty after four consecutive sessions of correction. "The Nifty could now head towards the next supports of 10,050-10,094 points early next week," Jasani said. "Further downsides are likely if these supports fail to hold. Any pullback rallies could find resistance at 10,230 points." In its last review, the RBI had kept the key lending rate unchanged.

According to Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, apart from the RBI's rate decision, investors will also look to the language and cues on the future inflation scenario. "Though the consensus is that RBI may not cut the repo rates, the language needs more attention if RBI turns more hawkish on sustained inflation and how the members' votes split," Nevgi told the news agency. Macro-data -- Nikkei Services PMI -- along with passenger vehicle sales will also determine the trajectory of the key indices on Monday.