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Indian markets are likely to move in a narrow range on Friday, initially, despite positive global markets, as crucial events are lined up. First, the Reserve Bank of India will declare the outcome of the three-day policy meet. Second, Tata Consultancy Services, the first major company to announce Q2 results, will give clues about the India Inc performance sheet, especially IT stocks.
SGX Nifty at 17,854 indicates about a 50-point gap up opening, as Nifty futures on Thursday closed 17,808. Overnight, the US stocks closed about a per cent higher while Asia-Pacific markets, in an early deal on Friday, edged up nicely. Japan and Australian markets are up by over 2 per cent and 1 per cent respectively, while, others such as Korea, Taiwan SE and Chinese markets eke out marginal gains.
Reverse Repo hike
The upcoming policy will be watched for the RBI's stance on liquidity management. While the RBI may not shock the system with a reverse repo hike, the policy will be used as a lever to prepare markets for a gradualist approach toward normalisation through both communication and action, said Emkay Global Financial Services. "Markets will still be assuaged that no premature tightening of financial conditions will happen and the uptick in yields will be managed," it added.
Motilal Oswal Financial said that in its recently concluded Annual Global Investor Conference – wherein 18 CEOs presented in the CEO Track session and 151 companies participated in investor meetings – corporate commentaries remained singularly upbeat across sectors, with managements across sectors (barring Auto) alluding to demand recovery well ahead of expectations.
India Inc remains bullish
"At our recently concluded 17th MOFSL Annual Global Investor Conference – wherein 18 CEOs presented in the CEO Track session and 151 companies participated in investor meetings – corporate commentaries remained singularly upbeat across sectors, with managements across sectors (barring Auto) alluding to demand recovery well ahead of expectations," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
Eye on power crisis
However, analysts warned that the current power crisis could derail bullish sentiment.
Stockpiles of coal, the fuel used to generate about 70 per cent of the nation's electricity, dwindle. Coal-fired power stations have an average of four days' worth of stock of fuel. The Union Power Minister, Raj Kumar Singh, has warned that the nation could be handling a supply squeeze for as long as six months. Power shortages are already emerging, and the gap between available electricity supply and peak demand widened to more than 4 gigawatts on Monday, according to government data from the power ministry.
However, "India’s sovereign rating upgrade by Moody’s Investors Services in the backdrop of persistent improvement in key economic indicators and faster ramp-up in vaccination bodes well and may aid India to remain resilient compared to global equities," said Binod Modi, Head Strategy at Reliance Securities.
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