How will be tomorrow for the Indian stock market?

As I speak US markets are down by 1.8%. 1.8% down on US is very huge. This slide comes mainly due to the fears of Greece defaulting on its international loans. The news on greece and the worst condition of global economy has been coming in since many days now but Indian markets are not moving in accordance with global markets. This is possibly because of India's own worries of inflation and rising fiscal deficit of the government. Indian markets are waiting with its fingers crossed for the RBI's decision tomorrow. Nifty is oscillating between 5450 and 5550 for over 2 weeks now. Market is uncertain where to go from this range. Today Nifty closed at 5447 which is almost a False closing. Markets might take decisive direction only after RBI's meeting tomorrow.

Tomorrow the whole nation's Industrial and financial establishment will be staring at the News channel to get what the RBI has decided. Expectation is that RBI will increase only 25bps on the rate. Last months RBI meeting surprised everyone when RBI raised rates by 50bps against the expectation of 25bps and markets sold off heavily. Tomorrow traders on the dalal street might be hoping nothing as such happens. 

What if RBI raises rates more than what is expected?

There will be a big sell-off in the magnitute of 2% down on Nifty and sensex. Over the next coming days also the markets will keep going down as Indian markets are due for correction in relation with Global stock markets which have fallen a lot. 

What if RBI doesn't raise rates?

 This will be a sweet surprise and market will go up heavily and it could be in the magnitude of 2% on both Nifty and Sensex. But the chance of this is very very low as the latest inflation data suggests that inflation is still high and uncontrollable.

What if RBI raises rates in line with expectations?

Markets will be satisfied as its expectation is met and markets will go up a bit say at max 1%. But soon traders will look at other important data coming from Europe and US which is negative and market will resume down turn. This sell off will be huge as Indian market were holding up well since 2 weeks whereas all around the world markets were falling.

I predict a level of 5300 on nifty by this month end if RBI raises rates.

Buying Nifty puts tomorrow is the best possible trade for tomorrow.