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Dalal Street ahead: RBI rate meet, Greece to set tone this week

Sunday, May 31, 2015, 22:04
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MUMBAI: The Reserve Bank of India’s rate-setting meeting and Greece’s loan repayment deadline may keep investors on their toes this week. While stronger fourth quarter economic growth and improvement in fiscal deficit may lift sentiment a bit early this week, the outcome of RBI’s policy meeting will be of bigger interest to investors. Expectations of a 25-basis point cut in repo rate have been baked into stock prices, though banks and automobile stocks could see heightened activity. Analysts said if RBI does not cut rate in line with expectations, the market could face a selloff. “A 25 basis point rate cut has already been priced (in) by investors. They will look forward to commentary by RBI on monetary easing cycle,” said UR Bhat, managing director at Dalton Capital. Some believe the reaction of the market to the RBI’s move and comments would be a test of strength for the market. Soon after the central bank’s policy meeting, investors will turn their attention to Greece’s loan repayment deadline on Friday. “Global markets may turn volatile in later half of the week on Greece loan repayment concern,” said Bhat. Greece is scheduled to repay $1.76 billion to the International Monetary Fund (IMF) on June 5. Markets are nervous because of the uncertainty that Greece may not repay the loan on time. Technical analysts said traders could create bullish bets in case the market weakens. “We believe one should utilise declines to go long, with Nifty support placed at 8,320,” said Amit Gupta, head of derivatives at ICICI Direct. “Nifty is likely to move towards 8,550. Rate sensitive stocks are likely to be drivers of the index.” Last week, the Sensex dropped 0.46% to settle at 27,828, while the Nifty declined 0.30% over the previous week to close at 8,433.

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