The RBI has increased the Repo rate by 50 basis points and the CRR by 25 basis points wreck the banking stocks and the global melt down any way forced the indices to open lower. The banks are struggling to maintain the margins are now fixed left with no option but to raise their lending rates, in turn loosing the growth momentum.
The Nifty lost the important bottom support, more than that the confidence in the markets up move. The Nifty though left with steam but the RBI’s rate hike damage was considerably impacted the sentiment. The election year, the populist measures and the vote wooing measures are on the top agenda.
The Nifty was beaten badly and it can be confirmed if it fails to trade above 4260 level. The Nifty gains strength if the low is above 4125 and closes above 4225. The Reliance and ONGC has to come to the rescue.
The market pulse check by STOCKOMETER: As suggested in the Stock Specific Action: The RIL behaved weak below 2150 and the low touched at 2075.
The ONGC stock became weak below 1005 low touched 960.60
The RCOM will be good above 509 but high recorded 506 and weak below 498 it did not touched 498 but the low touched at 485.20.
The SBI has support at 1335-25 levels weak below 1440-45 level but low touched 1306 closed at 1318.65. The Relcap is weak 1320 and the low touched 1208.05 closed at 1219 where the second support was give at 1215-20 level.
The DLF is weak below 493 and the high touched 495 and the low touched 465. In my earlier posts I suggested that it will touch 460 level.
The Tata steel is weak below 608 and the high touched 605, support may come at 571-568 but the low touched at 577.80.
The positive news is developing for Cairn and good above 230 and weak below 218-19 level. It traded above 230 levels for the first two hours and later touched low of 221.45, positively closed at 228.55.
For Stock Specific Action, Visit: www.intradaystockcalls.blogspot.com
Never Forget: I may be wrong, You may be wrong but markets always RIGHT.
The Nifty lost the important bottom support, more than that the confidence in the markets up move. The Nifty though left with steam but the RBI’s rate hike damage was considerably impacted the sentiment. The election year, the populist measures and the vote wooing measures are on the top agenda.
The Nifty was beaten badly and it can be confirmed if it fails to trade above 4260 level. The Nifty gains strength if the low is above 4125 and closes above 4225. The Reliance and ONGC has to come to the rescue.
The market pulse check by STOCKOMETER: As suggested in the Stock Specific Action: The RIL behaved weak below 2150 and the low touched at 2075.
The ONGC stock became weak below 1005 low touched 960.60
The RCOM will be good above 509 but high recorded 506 and weak below 498 it did not touched 498 but the low touched at 485.20.
The SBI has support at 1335-25 levels weak below 1440-45 level but low touched 1306 closed at 1318.65. The Relcap is weak 1320 and the low touched 1208.05 closed at 1219 where the second support was give at 1215-20 level.
The DLF is weak below 493 and the high touched 495 and the low touched 465. In my earlier posts I suggested that it will touch 460 level.
The Tata steel is weak below 608 and the high touched 605, support may come at 571-568 but the low touched at 577.80.
The positive news is developing for Cairn and good above 230 and weak below 218-19 level. It traded above 230 levels for the first two hours and later touched low of 221.45, positively closed at 228.55.
For Stock Specific Action, Visit: www.intradaystockcalls.blogspot.com
Never Forget: I may be wrong, You may be wrong but markets always RIGHT.
2 comments:
Jul 29, 2008 01:11 pm
CREDIT POLICY – WITH AN EYE ON INFLATION AND ONLY INFLATION
By Ruma Dubey
On hindsight, after all is over and done with, it is easy to look at the writing on the wall and see that the message was there all along. The first quarter macro economic survey was the preamble to the RBI Credit Policy. The skewed demand-supply situation in global crude; expectations of inflation to stay in the danger zone; lowering GDP projection to 7.9% from 8.1%; all pointed to one truth - things were not well with the Indian economy. Taking little comfort from the currently cooled down crude prices, which was clearly a ‘temporary’ situation, it is little wonder then that the RBI Governor called for the economy to remain resilient. And this was the message on which the Credit Policy was based - things are tough, the slowdown in the economic growth rate is a concern but stemming the double digit inflation is more of a priority and keeping that in mind, the RBI has taken the corrective measures.
Like Arjuna keeping his eye focussed on the eye of the fish, the RBI Governor, Dr.Y.V.Reddy, in what could probably have been his last Credit Policy announcement, has gone straight for the jugular. With the priority being to only stem inflation, he shocked one and all by hiking the repo rates by 50 bps and CRR by 25 bps, which will come into effect from 30th August 2008. This was way ahead of the market expectations of a 25 bps hike in repo and CRR rates.
The immediate effect of this huge rate hike was that the bond prices dropped down and bond yield rose from 9.08% to 9.39%. The BSE Sensex slipped down below 14,000 levels and the Bankex was immediately down 4.5%.
The RBI has stated that on a realistic level, it wanted the inflation rate to settle at around 7% by March 2009 while the ultimate aim is to bring it down to 5% levels. The aim is to bring down inflation, that’s it! Economic growth rate, as expected, is expected to take a hit. The RBI has as such lowered the GDP forecast from the earlier projected 8.1% to 7.9%. But after this round of rate hikes, the consensus is that it would not be surprising to see the GDP to actually settle at 7.3-7.6% levels.
The message which RBI has sent out by hiking the rates is that it wants to bring down the demand as that is the only way to bring down the prices. Banks would now have no option but to hike the interest rates. Bankers say that a 50-75 bps interest rate hike is inevitable right now. This rate hike would automatically cut demand. This is surely bound to have an adverse effect on the banking sector, automobile companies which to a large extent depends on auto loans, capital goods and infrastructure sector. Realty is also expected to take a hit.
There is no doubt that there is a lot of pain for the Indian economy in the short term. But at the same time, the message sent out is that the Central Bank of India is very vigilant and without being dictated by politics, it has taken a very tough stance to curb inflation. This round of rate hike though very high, at least indicates that the RBI is concerned and inflation is a priority. Economic growth rate does not affect the common man on the street directly and immediately but soaring price does. So it is more of a priority to address the issue of prices.
Despite these tough measures, one does not know whether RBI would be able to meet the target of a 7% inflation in March 2009. If crude price decides to gallop again, there is no doubt that RBI would have no option but to step in again. For now, RBI is surely on the right track and liquidity management would continue to remain a priority. No one likes a bitter medicine but it probably heals better.
HIGHLIGHTS OF CREDIT POLICY
vCRR rate hiked by 25bps to 9.0% with effect from the fortnight beginning August 30, 2008.
vRepo rates hiked by 50bps from 8.5% to 9.00%
vNo change in Bank rates, remains at 6%; these are rates at which long term loans are given to companies and individuals.
vReverse Repo Rate kept unchanged at 6%.
vGDP growth projection for 2008-09 revised from the range of 8.0-8.5% to around 8.0%, barring domestic or external shocks.
Jul 29, 2008 01:11 pm
CREDIT POLICY – WITH AN EYE ON INFLATION AND ONLY INFLATION
By Ruma Dubey
On hindsight, after all is over and done with, it is easy to look at the writing on the wall and see that the message was there all along. The first quarter macro economic survey was the preamble to the RBI Credit Policy. The skewed demand-supply situation in global crude; expectations of inflation to stay in the danger zone; lowering GDP projection to 7.9% from 8.1%; all pointed to one truth - things were not well with the Indian economy. Taking little comfort from the currently cooled down crude prices, which was clearly a ‘temporary’ situation, it is little wonder then that the RBI Governor called for the economy to remain resilient. And this was the message on which the Credit Policy was based - things are tough, the slowdown in the economic growth rate is a concern but stemming the double digit inflation is more of a priority and keeping that in mind, the RBI has taken the corrective measures.
Like Arjuna keeping his eye focussed on the eye of the fish, the RBI Governor, Dr.Y.V.Reddy, in what could probably have been his last Credit Policy announcement, has gone straight for the jugular. With the priority being to only stem inflation, he shocked one and all by hiking the repo rates by 50 bps and CRR by 25 bps, which will come into effect from 30th August 2008. This was way ahead of the market expectations of a 25 bps hike in repo and CRR rates.
The immediate effect of this huge rate hike was that the bond prices dropped down and bond yield rose from 9.08% to 9.39%. The BSE Sensex slipped down below 14,000 levels and the Bankex was immediately down 4.5%.
The RBI has stated that on a realistic level, it wanted the inflation rate to settle at around 7% by March 2009 while the ultimate aim is to bring it down to 5% levels. The aim is to bring down inflation, that’s it! Economic growth rate, as expected, is expected to take a hit. The RBI has as such lowered the GDP forecast from the earlier projected 8.1% to 7.9%. But after this round of rate hikes, the consensus is that it would not be surprising to see the GDP to actually settle at 7.3-7.6% levels.
The message which RBI has sent out by hiking the rates is that it wants to bring down the demand as that is the only way to bring down the prices. Banks would now have no option but to hike the interest rates. Bankers say that a 50-75 bps interest rate hike is inevitable right now. This rate hike would automatically cut demand. This is surely bound to have an adverse effect on the banking sector, automobile companies which to a large extent depends on auto loans, capital goods and infrastructure sector. Realty is also expected to take a hit.
There is no doubt that there is a lot of pain for the Indian economy in the short term. But at the same time, the message sent out is that the Central Bank of India is very vigilant and without being dictated by politics, it has taken a very tough stance to curb inflation. This round of rate hike though very high, at least indicates that the RBI is concerned and inflation is a priority. Economic growth rate does not affect the common man on the street directly and immediately but soaring price does. So it is more of a priority to address the issue of prices.
Despite these tough measures, one does not know whether RBI would be able to meet the target of a 7% inflation in March 2009. If crude price decides to gallop again, there is no doubt that RBI would have no option but to step in again. For now, RBI is surely on the right track and liquidity management would continue to remain a priority. No one likes a bitter medicine but it probably heals better.
HIGHLIGHTS OF CREDIT POLICY
vCRR rate hiked by 25bps to 9.0% with effect from the fortnight beginning August 30, 2008.
vRepo rates hiked by 50bps from 8.5% to 9.00%
vNo change in Bank rates, remains at 6%; these are rates at which long term loans are given to companies and individuals.
vReverse Repo Rate kept unchanged at 6%.
vGDP growth projection for 2008-09 revised from the range of 8.0-8.5% to around 8.0%, barring domestic or external shocks.
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