The Indian markets opened flat as investors will be eying RBI’s monetary policy review that is forecast to hold interest rates. However, in its review of macroeconomic and monetary developments for the July-September quarter, released a day ahead of the second quarter policy review, RBI said the monetary policy might respond more effectively to growth concerns. But inflation concerns may prevent bank from cutting key policy rates to complement the government’s recent economic reform efforts.
Majority of analysts feel the central bank may cut repo rate by 25 basis points and cash reserve ratio by 25 basis points.
The BSE Sensex was trading at 18637, up 2 points while NSE Nifty was quoting at 5,667, up 2 points too. Wipro, Infosys, TCS, HDFC Bank, L&T, ICICI Bank, Tata Power,SBI, Bajaj Auto, HDFC, Grasim, are among gainers in Sensex and Nifty. RIL, Sun Pharma, Coal India, ONGC, Tata Motors, Maruti, Hero MotoCorp, Ranbaxy, L&T, NTPC are among losers in Sensex and Nifty.
Technical analyst Sudarshan Sukhani of s2analytics.com expects the Nifty to breakout on the upside from the current trading range. “We do have some long positions now. The market is giving signs that they are willing to go up rather than go down,” he said in an interview to CNBC-TV18. However, he cautioned traders to protect their trade.
Banking and financials stocks are on buyers’ radar on hopes of cut in policy rates today. Top lenders State Bank of India and ICICI Bank rose 0.6-0.8 percent while housing finance company HDFC was up 0.5 percent.However, in a report titled ‘The debasing of the RBI and the negative consequences for Indian banks’, Ambit strategist Saurabh Mukherjea has written that over the years, RBI has been robbed of its independence in both monetary policy and banking supervision. He believes Reserve Bank of India is turning a blind eye to the rampant cooking of books by both private and public sector banks.
“Whilst flattering a bank’s Tier-1 can temporarily postpone the day of equity dilution, the risk that it creates is that the money markets will at some stage over the next year pull the plug on one of the private banks. That in turn could trigger a run on the bank which could undermine confidence in the Indian financial system. This (and not ‘policy paralysis’) is the single biggest risk to economic growth in India,” he wrote in the report.
The oil sector is likely to remain buzzing as the newly appointed petroleum minister M Veerappa Moily said that oil ministry will speed up decisions and create conditions to attract a potential $50-billion investments.
Power and Steel ministries too are likely to be in limelight as they are holding consultations with Crisil on its draft report on fixing reserve prices for 54 coal blocks to be allocated through competitive bidding route.
Power equipment maker BHEL shed another 1.5 percent following 6 percent decline yesterday post disappointing numbers in Q2FY13.
Maruti Suzuki dropped 1 percent ahead of quarterly earnings today.
Meanwhile the Finance Minister got into action again and announced he would nearly halve the deficit in just over four years. Expectations are that such an announcement could increase the chances a rate cut today.
Unveiling a five-year road map for fiscal consolidation to promote investments, contain inflation and take India to high growth trajectory, the FM said he will continue efforts to restrict fiscal deficit in the current financial year to 5.3 per cent of GDP.