Tuesday, 5 April 2016

Equity Tips by Investment Visor

Nifty likely to start lower ahead of RBI policy; volatility seen

Indian stocks are likely to start in the red, tracking weakness in oil prices that bogged down both Wall Street overnight and Asian markets this morning, even as markets head into a key RBI meeting where a rate cut is but a foregone conclusion.

At the time of writing, the SGX Nifty was trading 0.65 percent, or 50 points, to 7,735 points. Traders say there will likely be volatility today, with 95 percent of analysts polled by CNBC-TV18 expecting a rate cut by the Reserve Bank. The decision will be due at 11 am. 

However, in light of the Union Budget where the government stuck to its fiscal deficit target and its recent decision to cut the small savings rate, some analysts have said a 25 basis point cut may not be enough and even be disappointing for the markets. 
In other asset classes, the US dollar fell against the yen, Nymex fell to a one-month low while gold steady. A number of stocks will witness action such as OMCs after the fuel price hike last evening, as well as Equitas Holding, which lists shares today. Stocks related to leaks of the Panama Papers will also be in focus with the Indian Express today putting out a fresh list of individuals holding offshore accounts.

Expect RBI to cut rates by 0.25% in monetary policy: Raina
The USD-INR pair is approaching the lower end of the Rs 66-67/USD band with decent portfolio flows coupled with strong intervention keeping it in a tight range, says investment visor.

Ashutosh Raina, HDFC Bank said the RBI is widely expected to cut rates by 0.25 percent in the monetary policy later today, adding communication from policy makers will be keenly watched by the market participants. 

According to him, USD-INR pair is approaching the lower end of the Rs 66-67/USD band with decent portfolio flows coupled with strong intervention keeping it in a tight range. 

Raina expects the Rs 66-67/USD range to continue till the policy announcement. Meanwhile, the 10-year benchmark bond yield has rallied to 7.40 percent levels on the expectations of a rate cut from RBI, he says. He expects bonds to trade in a narrow range till the policy announcement.
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