Analysts say RBI policy, global trends, and foreign funds movement among others to be key drivers for markets next week

The biggest event that the market would witness next week is the Reserve Bank of India’s monetary policy decision along with other factors such as global cues, foreign funds movement, and crude oil prices may drive the trading sentiment in the equity markets, several analysts believe.

According to them, the Indian markets have been witnessing a rebound recently, however, the move lacks decisiveness on the back of lingering challenges like global policy tightening due to soaring inflation and geopolitical tensions.

With earnings season behind us, the focus would be on the upcoming RBI’s monetary policy review meeting, scheduled during June 6-8, Ajit Mishra, VP - Research, Religare Broking Ltd said adding that the markets have already priced in another hike citing the sticky inflation, however, the focus would be on commentary amid the updates of a favourable monsoon.

Besides, the performance of global markets and movement in crude will also be in focus, Mishra said, further mentioning that participants will be eyeing IIP data on June 10 0n the macro front.

Similarly, Yesha Shah, Head of Equity Research, Samco Securities pointed out that the inflation being a key factor will be the central point of all discussions in the coming week as China and United States’ inflation statistics will be released.

And, another significant event for domestic markets will be the outcome of the RBI MPC meeting, she believes, adding that the market participants will try to read between the lines of the RBI's monetary policy, and given the worsening inflation fears, the street expects a 35-50 bps repo rate hike this time.

Considering these major events, investors are currently advised to use knee-jerk reactions to, at best, cherry-pick quality stocks in resilient sectors and invest in a staggered manner, Shah advised.

"Elevated crude oil prices, GDP data and FII selling, and upcoming central bank meetings were other factors that may drive the market during the next week,” Vinod Nair, Head of Research at Geojit Financial Services said.

 He added that the RBI is expected to hike rates by 25bps to 35bps and Fed by 50bps, however, the central banks’ thoughts on growth and inflation will be an important determinant of market trend and if the central banks decide on a stringent policy tightening, the market mood can swing bearish.

Markets have been witnessing a rebound for the last 3 weeks however the move lacks decisiveness due to lingering challenges like global tightening due to inflation, geopolitical tension, etc.

The VP - Research at Religare Broking feels Nifty would regain some strength above 16,900 however a break below 16,400 will put bears back in the game. Participants should focus on sector/stock selection as markets are offering opportunities on both sides but avoid going overboard, he added.