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OPENING BELL:- NIFTY FUTURE up+6.25 @ 8774.55
BANKNIFTY FUTURE up+9.45 @ 20388.15
USDINR @ 67.4900

NIFTY FUTURE:-
S1-8758.87, S2-8732.18
R1- 8812.07 R2-8838.58

BANK NIFTY FUTURE:-
S1 – 20319.88, S2-20261.07
R1- 20448.18, R20517.67

Sensex, on Tuesday, closed 104 points down at 28,335 as investors maintained cautious view ahead of monetary policy. Among sectors, Oil and gas, Auto and metals lost over 0.8% to 1.3%  each. Among stocks, ONGC, Coal India and Tata motors lost over 2.9% to 3.5% each. Market breadth was negative with 1,596 declines against 1,285 advances.

Nifty closed 33 points down at 8,768. Today, we expect markets to open flat to negative on the back of steady global cues.

US Markets closed on a positive note. Dow and Nasdaq closed 0.2% higher. US markets, today, will see data releases on Crude Oil Inventories and 10-y Bond Auction.

Asian markets are trading on a mixed note; Nikkei is trading flat while Hang Seng is trading 0.5% down. SGX Nifty is trading 20 points down at 8,780. Indian ADRs ended the day on a mixed note. Among financial ADRs, ICICI Bank closed 0.9% lower, while HDFC Bank closed flat. Among IT ADRs, Wipro closed 0.6% up and Infosys gained 1.6%. Tata Motors ADR lost 3.0%.

Top news of the day - 

RBI Policy: UTI fund manager says MPC may hold repo rate on Wednesday

Opinion is divided whether or not the Reserve Bank of India (RBI) will cut rates at the monetary policy committee (MPC) meeting scheduled tomorrow. 

Leading bond fund manager Amandeep Chopra of UTI Mutual Fund believes that the scope for the RBI to slash rates is limited, given a number of global and local factors. In a conversation with CNBC-TV18, Chopra said, "I would be tilted to a potential pause tomorrow. The key reason [for the outlook] is rate hikes from the US Federal Reserve -- the market expects two and few economists think there could be three rate hikes." 

"Secondly, there is consensus among currency traders that dollar will strengthen and that will induce a fair amount of volatility for the emerging markets and thirdly recent data suggests that inflation is picking up across developed markets," he added. 

He further said that there is no reason for India to stay immune in this backdrop. He also listed domestic factors like rising crude oil prices and the roll-out of goods and services tax (GST) as reasons for the central bank to stand pat. 

However, if the central bank cuts rates, one may see a 10 basis points fall in the 10-year government bond yield, Chopra said. 

But even as there could be inhibiting factors, many economists, such as those at brokerages DBS, HSBC and Nomura, think that a 25 basis points to 6 percent could be in the offing. 

According to a report by Nomura, the Union Budget, presented by Finance Minister Arun Jaitley last week, is positive for medium-term inflation outlook. It did say that were the RBI to cut rates tomorrow, the central bank will have to hold rates for whole of 2017. 

The factors that RBI may consider before taking its call in the meet are: 

Funds in banks - Surge in bank deposits post demonetization has led to fall in lending rates by 1 percent. 

Crude oil prices - The recent uptick in oil prices pose an upside risk 

Inflation - Retail inflation as measured by the CPI (consumer price index) accelerated to 5.61 percent in December, rising for the fifth straight month 

Fiscal deficit - There was expectation of a steep relaxation of fiscal deficit limit for a much needed spending stimulus to the economy unlike the Jaitley's announcement of relaxation of fiscal deficit limit for his government to 3.2 percent of gross domestic product (GDP). 

Growth - Effect of demonetisation on growth

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