RBI policy announced. This was a big event this time as market was expecting a dovish kind of policy. Lets look whether the policy really satisfied the street. RBI kept the country`s key policy repo rate unchanged at 8 percent on Tuesday, as widely expected, with consumer price inflation coming down this year after a series of tightening steps by the central bank. The RBI also took steps to increase the availability of credit, reducing the mandatory amount of bonds lenders must park at the RBI - called the statutory liquidity ratio - by 50 basis points to 22.5 percent of deposits, starting in mid-June. RBI maintained its commitment to its target of 8 percent CPI inflation by January 2015 and 6 percent by January 2016. CPI accelerated to 8.59 percent in April. It also retained 2015 GDP growth estimate at 5.5 percent. Besides, outlook for the first quarter of 2014-15 remain grim due to a possible occurrence of El Nino which will delay south-west Monsoon, impacting agriculture and slowing down economic activity, the RBI noted. The repo rate, at which the Reserve Bank of India lends to banks, and the cash reserve ratio (CRR) remain unchanged at 8 percent and 4 percent, respectively. However, Rajan allowed for a SLR cut by 0.5 percent to 22.5 percent with effect from the fortnight beginning June 14, 2014, thus releasing Rs 40,000 crore of liquidity locked up in government securities. Bankers say this unlikely to boost loan growth, since most state-owned banks anyway hold more money in government securities than the mandated 23 percent. Lets dig in to the details of the Nifty rally today. Normally if the policy is dovish then Bank Nifty has to rise. But today both public sector and private sector banks were down. Then how the nifty rose today. Thanks to metals sector. BSE metal index rose 5 percent. A private survey showed that China`s factory sector turned in its best performance in four months in May as export orders improved although activity still contracted. This helped the metal share to rose. In case of Tata Steel and SAIL, Odisha government has allowed mining in four Tata Steel and three SAIL iron ore mines. SAIL has received environment nod for its Chattisgarh iron ore mine. SAIL rose 4.5% and Tata steel could make 6.5% gain. Overall today I cant say market really cheered by RBI policy. Look at ONGC and BPCL. Both supporting Nifty. Rupee is weakening now days. Today we can see a weaker rupee against Dollar. I think Nifty may not able to stay above 7400 if these basic fundamentals are turning negative. RBI is expecting control the inflation below 8. But if there is a worse than expected El Nino impact on food prices then it will be catastrophe. Though RBI governor wanted to show a dovish stand while holding his key agenda , the market is just look north only. How Excella Trader traded Nifty today. We were not buying Nifty today. Neither we sold it. Same time we could make a moderate gain from short selling State Bank of India futures. How to trade tomorrow - Nifty Nifty expected to open with negative note tomorrow considering the Global market cues available now . Dow and S&P trading down . dollar expected to strengthen. We are in a level where Nifty still stay above the big gap that it created . We will sell Nifty futures below 7400 . Nifty got an short term support at 7200. No this level became the key. As we are contained all favorable news upside may be limited. We are advising to book some profit this time. More aggressive traders can go for shorting Bank nifty at pre decided levels.
Posted on: Wed, 04 Jun 2014 07:24:09 +0000
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