A host of triggers will drive market sentiments this week. Among them

are the Reserve

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Bank of India’s money policy review, the first

quarterly results of the largest player by market capitalisation

Reliance Industries on Tuesday and last but not the least the expiry

of July futures and options contracts on Thursday.

Vikram Kotak, chief investment officer at Birla Sun Life Insurance

does not expect any hike in the cash reserve ratio (CRR) as he thinks

the liquidity is already in the negative terrain. While the rate at

which the RBI borrows and lends (Repo and reverse repo rates) may inch

up, he said.

“We expect a 25 basis point hike in repo and reverse repo rates in the

RBI’s upcoming monetary policy meet. Recovery in the developed world

remains anemic in nature and there is a lack of confidence on

self-sustenance of the recovery process on the withdrawal of stimulus

measures. On the other hand, domestic inflation, although high, has

most likely peaked. With the broad-based capex recovery still not

underway, any undue rise in the cost of capital at this juncture will

hamper the capex cycle,” he said.

The results of some large-cap companies, due this week, with about 35

per cent weightage in Nifty will be keenly watched. To name a few,

Reliance Industries, NTPC, Larsen & Toubro, Mahindra & Mahindra, ONGC

and Cairn India will report their June quarter results this trading

week.

“Results of Reliance and Larsen & Toubro will surely influence market

sentiments. Market has already discounted rate hike worries and

therefore only a hike of more than 25 basis points in key bank rates

may impact the market. Globally, the US markets closed on a positive

note last week. Results of stress test were also on the positive side.

Nifty has strong chances to surge to 5,550 levels at the expiry of

July F&O series,” said Mihir Mehta, assistant vice president of

institutional sales at brokerage Asit C Mehta.

Alex Mathew of Geojit BNP Paribas has similar views. “If everything

goes well, we may see Nifty moving above 5,500 levels before the July

F&O expiry,” Mathew said.

The stress test results for the euro zone banks were positive as only

seven banks of the 91 failed to pass the test.

Meanwhile, food inflation for the week ended July 3 rose to 12.81 per

cent against 12.63 per cent in the previous week.

The BSE Sensex rose 175.16 points, or 0.98 per cent, to close the week

at 18,130.98. The 50-stock index added 55.20 points, or 1.20 per cent,

at 5,393.90.