RBI rate decision, Q3 earnings to drive market trends this week: Analysts

Equity markets' focus will shift to the RBI interest rate decision scheduled this week, with investors also tracking the ongoing third quarter earnings, global trends and foreign fund trading activity, for further cues, analysts said.

Brent crude oil prices and rupee-dollar movement would also drive the trends in the market.

"The direction of the US market will be closely watched, but the flow of FIIs will be crucial because they have been selling heavily in the Indian market since the beginning of 2023, and it has intensified following the Adani Group crisis.

"This week will see the release of Q3 earnings from companies such as Bharti Airtel, Hero MotoCorp, Hindalco and Mahindra & Mahindra as well as macroeconomic data from the United States. RBI policy, whose outcome is scheduled for February 8, will be a critical domestic event," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.

Adani Group stocks have taken a beating on the bourses after the US-based Hindenburg Research made a litany of allegations in a report, including fraudulent transactions and share price manipulation at the Gautam Adani-led group.

Adani Group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.

Industrial Production data for December is scheduled to be out on Friday post market hours.

"We expect volatility to remain high this week as we have important events and data lined up. First, participants will be eyeing the outcome of the RBI policy meeting scheduled on February 8. On the economy front, IIP data will be unveiled on February 10," Ajit Mishra, VP - Technical Research, Religare, said.

On the earnings front, major corporates like Tata Steel, Adani Ports, Ambuja Cement, Bharti Airtel, Hero Motocorp, Hindalco, Lupin and M&M will announce their numbers during the week along with several others, he added.

"This week, a major trigger in the domestic market would be the RBI's rate decision and their commentary on future rate actions," said Vinod Nair, Head of Research at Geojit Financial Services.

In its December monetary policy review, the central bank had raised the key benchmark interest rate (repo) by 35 basis points (bps) after delivering three back-to-back increases of 50 bps.

Since May last year, the Reserve Bank has increased the short-term lending rate by 225 basis points to contain inflation, mostly driven by external factors, especially global supply chain disruption following the Russia-Ukraine war outbreak.

For the week ended February 3, the 30-share BSE benchmark jumped 1,510.98 points or 2.54 per cent.

"The domestic market showcased all the thrills of an eventful week and swung with great volatility between gains and losses. The Adani saga has created large turbulence during the week," Nair said.