Today, the market is likely to open weak. The global cues are adding to the discomfort. US markets tumbled snapping a six-week long rally on concerns about the financial sector earnings.
The RBI may well choose not to respond to the pleas of the bulls. Expectations are that a status quo could be maintained like in many earlier policies and action would be initiated at an ‘appropriate time’ later. Given that the lending activity has not picked up as much as RBI would like to see despite the liquidity easing, the central bank may choose to ask banks to lend more to specific sectors.
The markets have expectedly turned choppy. Given the gains in recent weeks, a cool-off was always on the cards. How the RBI plays its cards today will determine the further course of action (just for the day).
All eyes would be on the Reserve Bank of India as the monetary policy would to be unveiled on Tuesday. A rate cut may well boost some sentiment for the markets in the short term. The RBI, however, is likely to maintain a status quo considering that despite ample liquidity, credit offtake has remained lesser than desired.
