The nifty Midcap index was up 1.6 percent as about nine shares advanced for every share falling on the BSE.
RBI Policy Expectations: In the last six odd months, the macro backdrop has changed due to the evolving global and domestic developments.
Edelweiss said the Monetary Policy Committee (MPC) board would take the following factors into calibration while setting its policy stance & tone - rising crude oil prices, changing drivers of inflation, wider trade deficit in conjunction with a push back in the 3.0 percent fiscal deficit target by 2-year to FY21, increasing MSP to 1.5x of the cost of production and rising US yields.
"The current macro setting, higher inflation risks & increase in inflation expectations and a narrower output gap in FY19, would put the MPC on a cautious footing. While panel members are likely to have dissenting views and could recommend for the monetary committee to be on a front-footing already, we anticipate that the MPC members will vote for a status-quo on rates with a neutral stance," it added.
According to the research house, the interesting developments to watch for would be the MPC’s commentary on the Budget proposal of MSP price rise and the longevity of its impact on inflation and its inflation goalpost for FY19.
In its view, the FY19 inflation goalpost is likely to be set higher than its medium-term target of 4.0 percent for Mar’19. Thus, higher inflation in conjunction with higher GVA growth in FY19 would call for a neutral stance and with the upside risks to inflation, the commentary could be mildly hawkish.
Market Check: Benchmark indices rebounded sharply on Wednesday after witnessing losses in previous six consecutive sessions when the Sensex shed more than 2,000 points, tracking global recovery.
The 30-share BSE Sensex was up 367.36 points or 1.07 percent at 34,563.30 and the 50-share NSE Nifty gained 97.70 points or 0.93 percent at 10,596.
SBI, Adani Ports, Dr Reddy's Labs and Aurobindo Pharma were early gainers while NTPC, HDFC Bank, and Lupin were under pressure.
The nifty Midcap index was up 1.6 percent as about nine shares advanced for every share falling on the BSE.
KEC International, Tata Chemicals, REC, Dish TV, Jaypee Infratech and Thermax gained 1-5 percent while Vakrangee remained in lower circuit, down 5 percent.
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RBI Policy Expectations: In the last six odd months, the macro backdrop has changed due to the evolving global and domestic developments.
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