The stock market is not expecting any major negative surprise ahead of the crucial review meeting of the Reserve Bank of India?s (RBI) credit policy on Tuesday.
The current prices have already factored in a hike of 25 basis points (bps) in the cash reserve ratio (CRR) and/or the repo rate.
However, any hike beyond the expected level may dampen sentiment, dealers said. Also, another important factor that may weigh on the market sentiment going forward is the spread of terrorist activities. The Friday serial blasts of low intensity at Bangalore did play its role on the closing level, while the market is yet to give its reaction to the serial blasts that rocked Ahmedabad on Saturday, dealers added. The inflation based on the wholesale price index (WPI) for the week ended July 11 was recorded 2 bps lower at 11.89%.
Anil Advani, head of research, SBICAP Securities said, ?Currently, the spread of north-west monsoon in the country has remained inadequate. We need consistent rainfall for rest of the season across the states, which may have some positive impact on the rising prices and its subsequent impact on interest rates and markets. However, in the shorter term, the market is expected to remain volatile.?