THE WEEK AHEAD

The week ahead: Waiting for the RBI meet.

The Indian stock markets witnessed strong sell off on Monday. The Indian investors played on a cautious note since January 28^th will witness the third monetary policy meeting of RBI since the new governor took charge. All eyes are on Mr.Raghuram Rajan who has earlier surprised the markets by acting contrary to expectations. Financial problems in Argentina, fears of slowdown in china and decision of the Federal Open Market Committee have only added more confusion and risk aversion across the globe. With the rupee trading above Rs 63 to a dollar, it would be interesting to see how the RBI chief is going to handle the whole situation. The stock markets would move according to the stance taken by the RBI on Tuesday.The RBI is unlikely to change the interest rates tomorrow, according to many experts. Maintaining status quo on interest rates or hiking the rate will result in the stock market plunging further and this can be utilized for picking fundamentally good stocks, especially from the banking sector. Stocks from the banking sector are likely to be hit hard if the policy review results in negative response. The benchmark indices – the sensex and the nifty- closed at 20,707 and 6,135 on Monday evening with an approximately 2% loss.