That the RBI will resume monetary tightening after December’s pause is a no-brainer. Markets too have somewhat discounted a rate hike. But, there might still be an element of surprise that could hit the sentiment temporarily. Some are calling for an aggressive 50 bps hike to tame inflation. Whether D. Subbarao obliges or not we will know in a few hours.
The RBI is also likely to unveil fresh steps to tackle the tight liquidity situation. How the markets will react hinges on what the RBI finally chooses to do and also say. The start will be positive on the back of strong global cues. Volatility may inch up ahead of Thursday’s F&O expiry. Indian markets will be shut on Wednesday on account of the Republic Day.
The two-day FOMC meet begins today while President Obama will deliver his state of the union address. Dr. Reddy’s, HUL, Sterlite and UltraTech Cement are among the few top companies announcing their results today. Meanwhile, IOC and HPCL have deferred their results as they have not received compensation from the Government.
