RBI policy, RIL Q1 result to dictate stock market this week

It is expected to be an action packed week for stock markets with a plethora of factors dictating its movements - the Reserve Bank of India (RBI) monetary policy, Sensex heavyweight Reliance Industries' (RIL) Q1 results, expiry of July's derivative contracts and rising crude oil prices.

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Experts said Indian bourses may advance further this week if global markets remain supportive, but local factors could be the primary market movers.

After a fairly listless trading with a downward bias through the week, Sensex finally ended with a bang - shooting up 286 points on Friday on global rally post the bailout of Greece from a debt crisis.

That gain helped the BSE 30-share index gain 160.38 points or 0.86 per cent last week to close at 18,722.30.

"We expect the rally to continue in the market. The RBI credit policy will be a deciding factor of the market trend. Positives that could boost the markets include improved global markets, declining food inflation and better than expected monsoon," said Parag Doctor, Associate Vice President at Motilal Oswal Securities.

Experts said, however, that investor concerns were gaining ground on global crude oil prices moving up again.

IIFL Head of Research Amar Ambani said, "The fact that we will have RBI policy review and F&O expiry this week will make proceedings interesting. A slew of global economic statistics are also due this week. All in all, the week promises to be action packed."

Experts said RBI is likely to hike key rates by another 25 basis points on July 26, which the markets have already factored in; but more than that will be a strong negative for investor sentiment.

RBI has raised key policy rates 10 times since March last year to tame high inflation - which was 9.44 per cent in June - pushing up overall interest rates, hitting corporate margins and curbing consumer spending.

That apart, first quarter (Q1) results have been broadly uninspiring so far and markets are looking for a booster shot.

"Monday will witness results of heavyweight Reliance Industries and NTPC. Reliance results are likely to influence the market trend in short term," Bonanza Portfolio Senior Research analyst Shanu Goel said.

Last week, global markets witnessed a smart rally on the back of positive news of a relief package provided to Greece and other European nations to overcome the debt crisis. That helped markets shoot up the world over.

Locally, a decline in food inflation to 7.58 per cent and normal monsoons boosted the sentiment.