As traders and investors set their eyes on the Reserve Bank of India’s (RBI) credit policy on October 29, market experts expect equity and currency markets to remain volatile. Expecting markets to trade with a negative bias, analyst stressed on avoid buying until the market direction clears out.
Apart from volatile equity trading, experts expect rupee to weaken again. Forex traders are expecting RBI might decrease the MSF or atleast raise the cap on bank’s repo borrowing to ease liquidity.
Talking to The Pioneer, Ravi Rastogi from Globe Capital said, “market is extremely confusing and investors should be extremely cautious. The best policy in current scenario is to book profits on the first opportunity. Also investors should avoid buying at current levels as the markets have already rallied and we expect them to correct more.”
Talking about expectations for the RBI credit policy, he added, “We are expecting RBI to further increase the repo rate by 25 basis points (bps). Apart from that, the central bank might reduce the marginal standing facility (MSF).”
Fortune Fiscal’s Jagdish Thakkar said, “markets won’t be able to sustain on the higher levels due to lack of strong fundamentals. Investors should stay away from stock markets and keep a close watch on the RBI credit policy as it might decide the direction of the markets. Also investors can use the recent rally as an opportunity to secure their gains and book profits.
Expecting a marginal hike in repo rate, he added, “RBI might hike the repo rate by 25 bps in its credit policy. Apart from RBI, investors should also keep a close watch on the fed meeting.”
Stressing on the impact quantitative easing might have, Gaurang Shah of Geojit BNP Paribas said, “QE has only been postponed and until it is not differed till January, Indian markets would come under extreme selling pressure.”
While formulating trading strategy for investors, he added, “Investors should avoid buying until markets correct. Also selling on every rally would be the best strategy for investors. As far as RBI policy is concerned, we expect them to hike repo rate by just 25 bps.”
While most analysts have chosen a defensive approach towards markets, Kunal Saraogi from Equity Trendz holds a contrarian view. He said, “We expect markets to correct and investors should utilise this fall. Investors can pick up good quality midcap shares after the markets fall. Investments in sectors like pharmaceutical, FMCG, private banks and export oriented companies after correction would yield good returns.”