RBI policy and Stock Market | Stocks and Commodities

April 5, 2016
Time: 11.15 pm

RBI policy and Stock Market:

1. RBI cut the repo rate by 25 basis points.
2. As the announcement came, Bank Nifty fell about 250 points.
3. Immediately there was another news that said there will be lot of liquidity easing measures by RBI.
4. Then Bank Nifty shot up by 250 points only to fall 550 points from there.
5. Though markets were expecting 50 basis point cut by RBI, what informed people say is that RBI liquidity measure is more than 25 basis point cut and along with 25 basis point cut, it is equivalent to more than 50 basis point cut.
6. But market participants are not convinced and decided to sell.
7. Markets fell in January and February and markets needed a trigger to reverse.
8. So Budget became the trigger and markets reversed.
9. Now in March, Nifty was up by almost 1000 points, a trigger was needed for profit booking.
10. Today's RBI policy became that trigger and markets fell.
11. Global cues also supported the fall.
12. FIIs have sold for Rs 800 crores.
13. DIIs did not buy much, they have bought for just Rs 55 crores.
14. So the markets may continue to correct or consolidate but will not rise significantly from here.
15. European markets fell more than 2% and that aided further selling after 1.30 pm today.
16. PSU Bank index fell more than 5%.
17. Banking index, Auto and Realty indices were down by 3%.
18. Now SGX Nifty is trading about 15 points higher and we have to see how US markets close today.
19. In my opinion, today's reaction is a over reaction and markets will retrace some of the losses in the next two to three days.
20. The next trigger will be corporate results which will start next week.
21. Until then markets may go for consolidation.