Markets week ahead: From RBI policy decisions to bank loan growth data, factors that may drive Nifty, Sensex

The coming week will be holiday-shortened as markets will remain closed on April 4 on the occasion of Mahavir Jayanti and on April 7 due to Good Friday. The Reserve Bank of India (RBI) policy decisions will drive the market in the coming week. RBI will begin its 3-day monetary policy meeting on April 3 and the outcome of the meeting on key rates and economic outlook will be announced on April 6. There are expectations that the central bank will raise its main interest rate by 25 basis points and then pause for the rest of the year. The RBI raised its key repo rate by 25 bps to 6.5 per cent during its February 2023 meeting, in line with expectations, the sixth rate hike in a row.

Also, the coming week will be crucial as it’s the start of the new month and there will be some important macroeconomic data that will guide the markets. Investors will be eyeing S&P Global Manufacturing Purchasing Managers’ Index (PMI) data for March to be out on April 3. Market participants will be looking for the S&P Global Services PMI and S&P Global Composite PMI for March to be released on April 5. Besides, traders will be watching for the Foreign Exchange Reserves data to be out on April 7. On the same day, bank loan and deposit growth will also be released. Additionally, auto companies would grab some attention, as they will announce their monthly sales figures. 

Speaking on expectations from the RBI MPC meeting, Srikanth Subramanian, CEO at Kotak Cherry said: “It’s been a very busy FY23 for global central banks. On one hand, they had to take an aggressive monetary policy stance by hiking interest rates and withdrawing liquidity from the system, and on the other hand, they had to take steps to protect the banking sector from fears of contagion risk spreading across the financial system. For India, there seems to be a very limited risk of the banking crisis considering the stringent regulations around liquidity coverage ratios and capital adequacy requirements. 

Besides, Subramanian said the MPC would be taking note of all the evolving stories when they meet in April 2023. “RBI has already raised repo rates by 250bps. There is no overheating in the economy despite resilient growth. RBI may decide to take a 25bps hike in policy rates in the upcoming policy meeting and then take a pause. Over the next few months, we believe there will be more clarity of direction of US Fed, and impact of rate hikes on inflation and growth,” he added.

US market data: On the global front, investors would be eyeing some important economic data from the world’s largest economy, the United States (US), starting with S&P Global Manufacturing PMI and ISM Manufacturing PMI on April 3, followed by JOLTs Job Openings and Factory Orders on April 4, API Crude Oil Stock Change, ADP Employment Change, Balance of Trade (Export and Import), S&P Global Services PMI, ISM Non-Manufacturing PMI and EIA Crude Oil Stocks on April 5, Initial Jobless Claims, Baker Hughes Oil Rig Count and Total Vehicle Sales on April 6, Unemployment Rate and Non-Farm Payrolls on April 7.

Technical outlook: Rupak De, Senior Technical Analyst at LKP Securities, said: “Bulls remained at the helm as the benchmark Nifty closed well above the crucial resistance level of 17,250. On the daily chart, the index has moved above the recent consolidation, suggesting a rise in optimism. The momentum oscillator RSI has entered a bullish crossover. The trend is likely to remain strong as long as it remains above 17,200. On the higher end, the next important level is 17,500–17,600, where bears will be waiting,” he said.