Markets week ahead: Sensex may continue to fall ahead of RBI policy

The BSE Sensex is expected to decline next week, adding to its biggest weekly fall in five this week, on caution ahead of wholesale price-based inflation data, the Reserve Bank of India's policy review and the Federal Reserve's meet.

 

Rate-sensitive stocks are expected to lead declines after a pick-up in retail inflation to its fastest pace on record was seen forcing the apex bank to raise interest rates for a third time on Wednesday.

 

Option traders and technical analysts however say support for the Nifty is seen at around the 6,000 level.

 

After the RBI, the US Federal Reserve's policy decision will be closely monitored to see whether they choose to taper its monetary stimulus or for clues on how soon the taper would begin.

 

India's foreign exchange and debt markets are also awaiting the WPI-based inflation data due for release on Monday for cementing views on the likely outcome of the RBI's monetary policy review on Wednesday.

 

The rupee is expected to hold in a 61.50 to 62.50 per dollar range until the policy review.

 

Traders say bond market participants are more or less certain the apex bank will hike rates by 0.25 per cent after a higher-than-expected jump in retail prices in November.

 

The benchmark 10-year bond yield is seen holding in a 8.80 to 9.10 per cent range next week, according to dealers.

 

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