Mumbai, March 05, 2012 : Political events such as UP polls, RBI’s Monetary Policy and run up to budget are the main events to watch out for next week. In week gone by except monday market has managed to trade above 17,500 and till the time market trades above 17,300 it will trade in range between 17,300 to 17,800. On NIFTY Futures 5340 acts as major support and 5435 and 5510 act as resistance. Below 5340 NIFTY may slip to 5270 and 5150. We feels that market is going to trade between 5300 to 5500 band till budget.
UP Polls
Beginning week with assembly polls, on tuesday UP poll results will be announced and if Congress wins anything between 60 to 90 seats that will be hugely positive from UPA standpoint. It is fourway battle but anti-incumbancy may affect Mayawati and Samajwadi Party may emerge as strongest of all.
Monetary Policy Expectation
A section among economist believe that RBI may start lowering rate from March 2012 onwards and quarterly GDP data is also supportive of such tendencies. India Inc is still under pressure to service their debt and capital expenditure is moderately slow. Steps taken by RBI in January are yielding results but it needs to backed by rate cut and soft monetary policy. The only worry as of now is Crude Oil is continuously trading in upper band of $105 per barrel and if Iran episode explodes then it will be very negative for countries like india which imports 70% of its crude requirement from outside. Rate sensitive sector may see good run if RBI reduces lending rate.
Budget Expectations
Expectation on budget is quite high as Industry feels a reformist budget would help break the policy paralysis of UPA government. Implementation of GST, FDI in key sector, clarity on Oil subsidy and fundamental reform such as diesel price de-regulation will help government reduce fiscal deficit in much meaningful manner. Street is prepared for the fuel price hike once UP polls will be out. Finance minister would be very watchful for Fiscal deficit and ways and means to control it. Divestment of ONGC share is just one such example that government is keen to raise funds.
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