Dec 17, 2013 No Comments by

Once again we are waiting for RBI policy tomorrow. It has become a habit for the market to trade flat for a few days before the policy and then show huge movement on policy day. WPI and CPI are well above RBI’s comfort level. So, a further repo rate hike is not ruled out. There is a divide in the street. In past 3 policies there has been a rate hike. So, a rate hike would not surprise the street. It is already priced in as Nifty has been trading in red for past 1 week. On the other side, if there is no rate hike then definitely¬† the markets will rejoice. Even if there is a 25 bps rate hike, the markets might go down temporarily but will take this as a positive. Predicting RBI’s policy has become like a gambling game. If you are on the right side then you earn huge profits else the losses are huge.

The banks have been under performing. Even today bank nifty was down 164 points. This is the major reason why Nifty has been drifting down. The weight age of banks in Nifty is substantial. So, a red tick in banks takes the Nifty down.

Apart from RBI policy we have the FOMC meet also. So, any QE tapering or indications of QE tapering will take the markets down. It will be interesting to see if the outcome of two events oppose each other, then which will take precedence.

The global markets are also trading randomly. So, any particular cue can not be taken from them. Tomorrow we will come to know whether we will go down to 5900 or head towards 6300 levels.








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