RBI policy to set the tone for markets

The BSE Mid-cap index gained 1.1% while the Small-cap index surged 1.3%, outperforming the benchmark indices

Benchmark indices broke its four-week winning streak to end with marginal losses amid profit-booking. In the week ended April 1, the BSE Sensex ended 68 down points at 25,270 and the National Stock Exchange’s Nifty slipped three points to settle at 7,713.

Among broader markets, the BSE Mid-cap Index gained 1.1 per cent, while the Small-cap Index rose 1.3 per cent, outperforming the benchmark indices.

“The Nifty is likely to remain between 7,200 and 7,600 for quite some time. Markets will watch out for the Reserve Bank of India’s policy (review) meet next week and a rate cut of above 50 bps (basis points) could be a positive surprise. However, 25 bps is already factored in the markets.

A key cue is the earning season. How the monsoon will pan out will also weigh on market. Since the valuations are reasonably favourable for investors with long-term perspective (two-three years), it’s a good opportunity to invest and expect compounded returns of 16-20 per cent” says Sachin Shah, fund manager, Emkay Investment Managers.

World stocks gained during major part of the week after US Federal Reserve chairperson Janet Yellen indicated the US central bank would move cautiously in regards with interest rate increase.

RBI policy to set the tone for markets On the macroeconomic front, the economic data released by the government on Thursday showed the output of eight core industries, about  38 per cent of the weight of items included in the Index of Industrial Production (IIP), surged 5.7 per cent in February, highest expansion in 15 months.

Foreign institutional investors remained net buyers in equities to the tune of Rs 5,478 crore during the week, according to provisional stock exchange data.

Key stocks

Bharti Airtel was the top loser on the Sensex during the week, down almost seven per cent.

Bank shares edged higher on expectations of rate cut by RBI. Further, the central bank on Tuesday clarified some of the provisions relating to the marginal cost of funds-based lending rate (MCLR) system, which came into effect from Friday.

Among health care stocks, Lupin slipped by almost four per cent. Sun Pharmaceutical lost about four per cent.

In automobile pack, Mahindra & Mahindra plunged about four per cent.  Tata Steel slipped about one per cent. The company's plan to restructure its UK businesses is credit positive, as it will reduce some of the negative pressure on its operating performance, Moody’s Investors Service said in its report.

IVRCL plunged by 18 per cent during the week, dipped to its lowest level since July 2003.

Week ahead

The major event is the first bi-monthly monetary policy of the RBI for FY17 on Tuesday, Markit Economics will unveil the outcome of India's manufacturing sector for March 2016 on Monday.

The initial public offering (IPO) of Equitas Holdings opens for bidding on Tuesday.

Also, six-phase polling for Assembly election in Bengal and two-phase polling for Assembly election in Assam begins on Monday.

BHEL is scheduled to announce its tentative financial performance or flash results for the year ended March 31, 2016, on Thursday.