Will D-Street bulls hold fort before RBI policy verdict? See what experts say, historical data show
Nifty50 clocking 4% gains in just four trading sessions of the month.
This 4% rally follows over 5% gains registered by benchmark indices in November, backed by strong institutional inflows.
But a sense of fatigue among Dalal Street bulls was felt on Wednesday after Nifty50 dropped almost 100 points from its lifetime high-level intraday.
The other indicators that also point to a possible brief pause in the market rally are India VIX and technical indicators.
“India VIX rising up to 13.75 levels and RSI indicator sustaining above 83-84 levels are indicating overbought nature of the index, implying a possibility of the Nifty 50 consolidating
in the coming few sessions, especially with the weekly expiry on Thursday and RBI policy outcome scheduled on Friday,” said Sudeep Shah, deputy vice president and head of technical and derivatives research, SBI Securities.
The Reserve Bank of India’s three-day monetary policy meeting began on Wednesday, and it’s widely expected that the central bank will leave the repo rate unchanged at 6.5% in
the backdrop of strong GDP growth, easing core inflation, and tighter liquidity conditions.
This policy action has been largely factored into the recent rally that equities have seen, and, therefore, it may not have a major impact on the market.
However, RBI Governor Das’ assessment of the domestic and global economic conditions, his tone on inflation, and any negative surprises for the banking sector could play as
dampening factors and trigger a round of profit booking, according to experts.
