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People are not expecting too much from today's monetary policy. If there is a rate cut, then the street will certainly be positively surprised and we will see an immediate reaction in the stock and the bond market.
There is just one day to go for the Union Budget; today is the day of the monetary policy and lots of drama is happening around the Railway Budget. So, this is heavy news flow that the market is wading through some good and some not good, said CNBC-TV18's managing editor Udayan Mukherjee.
The thick of liquidity flows has not deserted us, which remains as robust as ever. So, there would be a lot of give and take for the market, one should expect couple of days of volatility leading up to the end of this crucial week.
But, I donít think people are expecting too much from today's monetary policy and that is the good thing. Most people on the street said, last Friday was the monetary policy and today nothing will happen, they will watch the Budget.
As far as the drama about the rail price hike is concerned, the market will now watch how things will move between the TMC and the Congress. There are two ways to look at it; there is a bullish way and a bearish way. The bullish way, some people might think that the Congress has made up its mind that this is no accident, they have got reasonable numbers with other parties in the Parliament and maybe this is a prelude to a fairly tough Budget from the government as well. So, the government has said that they might as well start with Railway Budget and present tough Union Budget. If the TMC does not like it, it may lump it.
The bearish view is that things are unravelling, the Congress will have its tail between its legs in the next 48 hours. It will accept the railway ministerís resignation and also the rollback of the passenger fare hike. It will also then put a lot of pressure on the Finance Minister to dispense with anything that was bold in the Budget. Two days before the Budget if something dramatic as this happens sacking of the railway minister etc, on a proposed fare hike then what can we expect the government to do.
I donít know I am still keeping a small hope for that bullish case and saying that maybe the Congress comes out fighting out a really sticky situation and does something that none of us expected to do. But the majority of people will take probably not a great take away from this. The event of the next 48 hours could be interesting in how the government reacts to this conflict, which is been thrown down by Mamata Banerjee.
Even if a token petrol price hike happens diesel is the thorny one and she will not let it pass. So that is the call, which the government has to and maybe they were testing the waters with the Railway Budget and say letís see what she does. She has certainly reacted vociferously, which means that the governmentís hope of pushing through something like a diesel price hike are very difficult right now.
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Tone down expectations; valuation getting richer: ICICI Pru