RBI Remains Stubborn Yet Market Stays Strong

Market This Week

After Union Budget, another awaited event that investors were waiting with bated breath was RBI Monetary Policy meeting. Investors and majority of bankers were targeting 25 bps rate cut in this quarter. Before policy 70% bankers were behind rate cut as last policy was unchanged while 30% were with no change. But the market is all about 'expect the unexpected' rule and same thing happened here as well. As the policy was announced market reaction was too cool and minor down side was seen but soon market recovered sharply.

Investors were waiting for the opportunity to enter the market and that is exactly what happened. Hardly any impact was seen on the stocks. Large-caps, mid-caps and small-caps, all were moving decently post policy announcement.

Movers & Shakers

Rajya Sabha is adding movement in the market as Prime Minister Narendra Modi cleared his intentions against black money and corruption on the floor of the house. PM Modi delivered a speech which looked like doubt clearing sessions for opposition parties.

Looking at the earnings season, most of the stocks have delivered better results considering the demonetisation impact. Most of the sectors already have trimmed their growth post demonetisation but stocks earnings are giving a different story altogether. Banks are most awaited in the earnings now as banks are having ample amount of cash deposited post demonetisation and investors are waiting for strategies with which banks may come up post earnings.

Key Market Drivers

Infra sector is looking much stronger as huge allocation has been done by the government and revenue visibility has been on the improving side for the companies. Project inflows are getting stronger strengthening order books of the companies. Owing to the developments post budget this sector is going to be on the watch-list of many investors as it give good growth potential.

Event Watch

Post budget, all major sectors like banks and infra are holding the market with positive sentiment thanks to the provisions and allocation of funds by government. Furthermore, FIIs are giving some turnaround as well while DIIs are still investing good amount everyday into the equities. All in all Market is sensing positive sentiments and we can say fresh buying might happen in the coming days.

Stocks To Watch

Gujarat Alkalies and Chemicals is on up side while Infratel is on down side.