Reserve Bank of India's monetary policy review this week is expected to influence the stock markets in the days ahead and investors are likely to remain in an upbeat mood, analysts said.
Emerging from the issue of participatory notes and market regulator SEBI's directives, the stock markets had zoomed on Friday breaking all the previous records. The benchmark index BSE Sensex had gained over 1,600 points during the previous week to end at a new high of 19,243.17 on Friday.
Analysts say the course taken up by the markets in the coming weeks could also depend on flows from Foreign Institutional Investors (FIIs) in the domestic markets.
FIIs have made net purchases of Rs 20,103.60 crore in October till now and the total foreign investments in equities have been Rs 71,269.80 crore this year so far. Last week, FIIs had sold heavily on three occasions due to the uncertainty on the SEBI move to curb unidentified foreign inflows.
Though analysts hardly expect any change in interest rates by RBI in its mid-term review on Tuesday, it remains to be seen whether RBI raises cash reserve ratio so as to suck out excess liquidity in the banking system.
Besides, inflation had remained unchanged at 3.07 per cent for the week ended October 13 despite rise in prices of food products and some manufactured items.