Skip to main content

RBI credit policy


 Today RBI will review credit policy . RBI’s six-member Monetary Policy Committee (MPC) is meeting second time after demonetization .  Market is expecting  25 basis points cut in repo rate . Repo rate is short form of repurchase rate .It is also known as short term lending rate. RBI lends money to commercial bank as per this rate . Low repo rate is not only beneficiary to commercial bank but also to industry .  Commercial banks can lend money at low rate to industry if they get benefited  from RBI .
      In last meeting MPC had  left repo rate unchanged to 6.25 % . The decision was taken considering some internal as well as external factors .  The  main external factors which were considered by MPC were possible rate hike by US fed and rising oil price as well as US dollar . At present US federal reserve has preferred pause for rate hike but concern of rising oil price has not gone away . Rising oil prices is a  challenge to India’s growth. Economic Survey presented in Parliament has also confirmed this view. The main internal factors considered by MPC were situation after DeMo (demonetization) . After DeMo lending rates have already fallen by up to 1%. In spite of that   there was little enthusiasm  among borrowers which was also considered by MPC in keeping repo rate unchanged .  RBI, acknowledging the demonetisation factor had lowered its gross value added growth estimates for the current fiscal to 7.1% from 7.6% forecast earlier.
        Considering above factors  experts feel that stock market is unlikely to rally further with repo rate cut of 25 basis points .Any more rewards or rosy outlook will provide excuse to push market up though valuation is not so cheap. Any disappointment will pull market down . In that case Nifty's downside towards 8660 not ruled out . 


Popular posts from this blog

Trade like bull and make fortune in capital market

Welcome to GujaratBull - a place to make fortune in capital market. At GujaratBull we interact with different type of people from novice to veteran players/investors of share market. We have found mainly two common findings among these people. The first is that majority of them have come into share market to generate some extra income. The second thing is with tips or so called research they sought from here and there. They are told to invest/trade with many ifs, so and then! The stories at other places, too, are not different.      Now if you analyze above findings then you would realize that there is correlation between first and second finding. In share market people get lots of ifs and then to trade/invest and that’s why they do not invest lots of money. They do not have enough confidence in tips/calls/research and that’s why they invest less and expect just extra money. If there are so many ifs and then, then who would be the fellow to pour heavily his/her hard earned money for g…

POWER OF TECHNICAL ANALYSIS

Basic rule of technical analysis    Minting money in capital market is not so hard either with technical analysis of stocks or fundamental analysis of stocks .The condition is that you follow system of  technical analysis or fundamentals .You need to stick with the rules  you have learned . On other side there is high chances of losing money  if you don't trust yourself and get confused by listening others. The rules of trading and investing are quite different.If your are trading is based on technical analysis and you are  listening guys of  fundamentals then forget making money in market. Here I am sharing real example which will clear doubts about  this basic theory . My study of 7th July on #BankNifty  On 7th July Bank Nifty was struggling to go up and there were hardly any expert who were advocating to buy it . My guess is that they were fearing immediate crash of bank nifty as NPA was hot subject on discussion .On previous day a leading financial news paper had added more …

Nifty is preparing for rally

In this article I am highlighting some glaring points for the possibility of the rally in Nifty.This might sound somewhat unrealistic when the majority of the analysts have turned bearish after the outbreak of Coronavirus. Before I present some technical views let me explain the current sentiments of Indian market. Within 2-3 weeks, Indian market has witnessed many events. Let us start from the budget. As usual there were very high expectations from the budget. Stock market participants were expecting a booster dose from the finance minister by addressing issues of long term capital gains shortly known as LTCG. Now every analyst knows that FM has hugely disappointed the market by doing opposite to expectations. Instead of removing LTCG, the stock market is slapped with a new provision of dividend distribution tax shortly known as DDT. As per the new provision the burden of DDT is shifted to investors from corporate. Now onwards investors will have to pay tax on the received dividend…