Tomorrow is RBI policy day, rate cut ? Not an option, why rock the boat when things are going good. Rate increase, would not put past Raghu Ram to try this trick , especially when the market can absorb an increase at this point in time .It would also deal a big blow for inflation which will and is creeping back. But generally the market says no change, and it has already factored this in.Now how would the market behave if an increase was declared?I do not think it will change things much the FII's for all you know will pump in more money.
Where do we see this market , the Chinese data if it comes out lower then we shall see a fall in metals. The US data if it comes out not good, would not make much of an effect on our markets. The key is how far the RBI is going to let the rupee go. Will it keep buying to impede its rise or the best option to control it would be to raise the interest rate. Now this would sound bizarre but it could work.
The FII's are happy to see dips of 40 to 60 points they will turn it into an opportunity to buy and then take the index up by 100 to 120 points.The shorter's get killed at regular intervals and short covering takes the index up higher.Will we see 7000 in the next ten days, well we need to cross Aprl 7th, and see if the locals bulls turn into bears by that time.At the moment, they give all their support to the FII's but time will come when they need to see where this election is heading to, and getting pragmatic, and not get carried away by the euphoria.This will be just before the voting starts, and when the market will become very volatile.
Hence as the saying goes make hay when the sunshine's, and make the best for the rainy day.....and do not get into any long term relationship with any stock or Index. You can always get them cheaper in the long run.