How are the markets placed ahead of RBI policy?

The US Federal Reserve’s surprisingly dovish monetary policy, where the Fed chair announced a 75-basis point rate hike, was a shot in the arm for market bulls. The ensuing relief rally in the markets, catapulted the benchmark S&P BSE Sensex 1,753 points higher in two days, while the Nifty50 jumped 457 points. 

With this, the frontline indices clocked weekly gains of 2.6 per cent each last week.

They also galloped over 8 per cent during the month of July, clocking their biggest monthly rally since August 2021.

Going into this week, analysts say the US Fed’s comments may also prompt the Reserve Bank of India to go easy on the policy tightening. 

Nishit Master, Portfolio Manager, Axis Securities, believes RBI to hike rates between 25 bps to 35 bps. Flat June inflation to guide rate hike quantum. Easing inflation will slow down rate hikes. Don't see any major repercussions on markets

Meanwhile, ahead of the RBI’s policy decision, stock specific action will dominate D-Street as corporate earnings enter their last leg.

ITC, Zomato, IndiGo, Lupin, Voda Idea, Adani Enterprises, Mahindra & Mahindra, Nykaa, Paytm and Titan are some of the top companies slated to announce their results this week.

Technically, the Nifty closed above its 50-Weekly Moving Average last Friday. If it sustains the level, it could attempt to extend gains this week.

A decisive hold of the 50-WMA, placed at 17,085, can push the 50-pack index towards it trend line resistance of 17,360. On the downside, 16,600 could act as a strong support. As regards Sensex, the BSE benchmark can move in a broad range of 55,900 to 58,850 this week.