SENSEX
17143.69 +304.49
NIFTY 5199.80 +99.95
USD/INR
0055.53 +00.29
NASDAQ 2945.52 -12.57
GOLD 29785.00 -11.00
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UPDATEDTIME 09.28 PM 30 JULY 2012
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The Nifty posted
its biggest percentage gain in July on Monday and closed near the resistance
level of 5,200 on the back of positive global cues and hopes of a rate cut by
the Reserve Bank of India at its policy meet tomorrow.
According to market experts, chances are that the central bank may cut the repo rate tomorrow as current macroeconomic backdrop offers ample reasons for it to continue with monetary easing (that started in April 2012) with better conviction than on previous occasions.
Given the slack in the economy, core inflation (and not headline) should be the benchmark for the central bank. Core inflation declining trajectory clearly makes a strong case for a reduction in policy rates. Further, high interest rates are becoming increasingly counterproductive hurting fiscal consolidation, deepening investment slowdown and impeding inflation easing," said an Edelweiss report.
In short, based on above reasons, we are firmly of the view that the RBI should reduce its policy rates by 25 bps on July 31. Meanwhile, given the comfortable position in liquidity, CRR should remain on hold," it said.
However, the recent comments from the RBI suggest that it would be looking to reduce its policy rates only when the headline inflation starts to ebb.
"Given the poor monsoon, agri-prices are likely to move higher, thereby keeping the headline WPI/CPI inflation elevated in the coming months. This certainly raises the risk that the central bank may resist further monetary easing in the forthcoming policy meeting," the report said.
Meanwhile, the RBI in its quarterly macroeconomic view report said that the FY13 fiscal deficit goal is at risk of being breached. The RBI expects Q2 2012 GDP growth to be weak and FY13 growth may be lower than expected.
It sees near-term inflation outlook marked by several upside risks and expects capital flows to stay volatile due to global uncertainties.
The RBI has cut the FY13 GDP growth forecast to 6.5 per cent from 7.2 per cent.
The benchmarks, backed by positive global cues, witnessed a short covering rally on rumours that the RBI may cut rate tomorrow.
The Sensex ended at 17,143.69, up 304.49 points or 1.81 per cent. It touched a high of 17,163.95 and a low of 16,919.14 in trade today.
The 50-share Nifty index closed at 5,199.80, up 99.95 points or 1.96 per cent. The broader index was at 5,206.60 and a low of 5,129.75 in trade today.
I do not think much is happening in the longer term. Basically the Nifty corrected from 5,350 down to 5,050 and now we have an upswing which most likely will not cross 5,350. At higher levels, the lack of action or the lack of policy statement or the lack of rate cut will come back to haunt the market. Chances are that we may consolidate for the next few weeks within broad range of 5,050-5,350 and finally move towards 4,700-4,800 going into September, October kind of time frame.
The BSE Midcap Index was up 1.53 per cent and the BSE Smallcap Index gained 1.29 per cent.
Among the sectoral indices, the BSE Power Index gained 3.58 per cent, the BSE Realty Index advanced 3.13 per cent, the BSE Capital Goods Index rose 3 per cent and the BSE Bankex advanced 2.67 per cent.
SBI (4.63%), Tata Motors (4.16%), Tata Power (4.12%), ICICI Bank (3.89%) and BHEL (3.82%) were among the top Sensex gainers.
ONGC (0.31%), HUL (0.02%) and Wipro (0.02%) were the only index losers.
The market breadth was positive on the BSE with 1616 gainers against 1143 losers.
According to market experts, chances are that the central bank may cut the repo rate tomorrow as current macroeconomic backdrop offers ample reasons for it to continue with monetary easing (that started in April 2012) with better conviction than on previous occasions.
Given the slack in the economy, core inflation (and not headline) should be the benchmark for the central bank. Core inflation declining trajectory clearly makes a strong case for a reduction in policy rates. Further, high interest rates are becoming increasingly counterproductive hurting fiscal consolidation, deepening investment slowdown and impeding inflation easing," said an Edelweiss report.
In short, based on above reasons, we are firmly of the view that the RBI should reduce its policy rates by 25 bps on July 31. Meanwhile, given the comfortable position in liquidity, CRR should remain on hold," it said.
However, the recent comments from the RBI suggest that it would be looking to reduce its policy rates only when the headline inflation starts to ebb.
"Given the poor monsoon, agri-prices are likely to move higher, thereby keeping the headline WPI/CPI inflation elevated in the coming months. This certainly raises the risk that the central bank may resist further monetary easing in the forthcoming policy meeting," the report said.
Meanwhile, the RBI in its quarterly macroeconomic view report said that the FY13 fiscal deficit goal is at risk of being breached. The RBI expects Q2 2012 GDP growth to be weak and FY13 growth may be lower than expected.
It sees near-term inflation outlook marked by several upside risks and expects capital flows to stay volatile due to global uncertainties.
The RBI has cut the FY13 GDP growth forecast to 6.5 per cent from 7.2 per cent.
The benchmarks, backed by positive global cues, witnessed a short covering rally on rumours that the RBI may cut rate tomorrow.
The Sensex ended at 17,143.69, up 304.49 points or 1.81 per cent. It touched a high of 17,163.95 and a low of 16,919.14 in trade today.
The 50-share Nifty index closed at 5,199.80, up 99.95 points or 1.96 per cent. The broader index was at 5,206.60 and a low of 5,129.75 in trade today.
I do not think much is happening in the longer term. Basically the Nifty corrected from 5,350 down to 5,050 and now we have an upswing which most likely will not cross 5,350. At higher levels, the lack of action or the lack of policy statement or the lack of rate cut will come back to haunt the market. Chances are that we may consolidate for the next few weeks within broad range of 5,050-5,350 and finally move towards 4,700-4,800 going into September, October kind of time frame.
The BSE Midcap Index was up 1.53 per cent and the BSE Smallcap Index gained 1.29 per cent.
Among the sectoral indices, the BSE Power Index gained 3.58 per cent, the BSE Realty Index advanced 3.13 per cent, the BSE Capital Goods Index rose 3 per cent and the BSE Bankex advanced 2.67 per cent.
SBI (4.63%), Tata Motors (4.16%), Tata Power (4.12%), ICICI Bank (3.89%) and BHEL (3.82%) were among the top Sensex gainers.
ONGC (0.31%), HUL (0.02%) and Wipro (0.02%) were the only index losers.
The market breadth was positive on the BSE with 1616 gainers against 1143 losers.
Regards
RAKESH MAKIN
+91, 9041667797(DIRECT),
9915684997
OFF 0172-4657997
PANCHKULA (Haryana).
Email:makin_97@yahoo.com
Group mail id: makin97NSEtips@yahoogroups.co.in
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