Arbitrage funds benefit from the price difference between cash and futures market. They earn a spread by buying in the cash market and selling in the futures market. Financial planners point out that many investors who are staggering investments into equities use arbitrage funds as a parking vehicle, due to lower taxation as compared to debt funds.
Monetary policy expectations impact stocks more than rate moves: RBI paper
Equity markets are impacted more by the expectations of future monetary policy than the policy rate surprises on the day of announcement of the policy