Traders were in wait and watch mode ahead of RBI's Credit Policy. The markets traded in a narrow range through the day. At close, the Nifty stood at 5,090 down 22 points while the Sensex shut shop 110 points lower at 17,016.

JP Sinha of Mangal Keshav said he is not expecting any change in tomorrow's RBI Credit Policy.

"There are a lot of contradictory signals which are there. On one hand, you are now facing a serious threat of inflation while on another you are facing the impossible threat to growth. The IIP numbers are not very exciting. If there is a further increase on the repo side, it could come as a normal expectancy. But if there is 50 basis points hike then that can definitely be a shocker. The SLR people are now talking about market estimates to be slightly enhanced. So, any further switches tightening liquidity on the monetary side, should or it would not happen. If anything as such happens, it will come as a shocker. I am advocating a status quo at this point in time."

Vibhav Kapoor of IL&FS said there is a change in sentiment to some extent. “It would be difficult to say whether there is a change in trend because technically we have had about 6,000-6,500 points from January to March. This could still very well be a sort of correction of that down move that we had and we have covered about 35-40% of that. So, we could see a 50% correction, or go to about 18,000 on the Sensex.”

On results, he said, there has been a lot of churning in the market based on the corporate performances that have been coming in. “Results have been sort of mixed. Some sectors like telecom have done exceedingly well. Software did not that well. It did better than what the market expected at the beginning of the results season. We have had fairly good rallies there. But the overall rally has been sort of limited to some sectors and stocks.”

Kapoor feels any increase in the repo or reverse repo rate tomorrow is going to be significant. “We can see that raw material and input cost are going up significantly. Demand in some of interest rate sensitive sectors is also pretty slack. So, if you have a further interest rate hike from here, it is going to be taken note of by the market and going to be difficult to shrug it off. In that case, you could have at least a temporary top here and some significant correction to follow.”

Rahul Mohindar of viratechindia.com said today’s trade was not too bad. "It’s just a breather that the market has taken. It's well above 5,070-5,080 which should hang in there as supports. I really don’t expect too much of a negative from here. Short- to medium-term, I would still recommend holding on to Nifty longs."