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Wednesday, October 31, 2012
RBI effect: Sensex, Nifty break down
The Indian equity market finally broke down from its trading range. Market had opened on a flat note and remained in a tight range in the earlier part of the day. Post the RBI policy announcement the indices fell sharply. The RBI reduced the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.5% to 4.25% of their net demand and time liabilities (NDTL) effective the fortnight beginning November 3, 2012. As result of this reduction in the CRR, around Rs175 bn of primary liquidity will be injected into the banking system. This was however, more on expected lines and the street would have been happy to see a rate cut. Technically, Nifty violated the neckline of Head and shoulder top after breach below 5630 with renewed selling pressure from financial. Nifty has currently retraced 38.2% of the recent up move from 5223 till 5801 which corresponds to 5580 and move below same could drag Nifty well below 5500 in the coming days. The interest rate sensitive stocks were under pressure. The BSE Banking and the Realty index were the top losers shedding ~2.2% each. Among the other major losers were BSE Consumer Durables index down 2.2% and BSE Capital Goods index fell 2%.
Indices set to open flat
Always act like you're wearing an invisible crown. ~Author Unknown The RBI seems to have a mind of its own when it comes to its policy measures. The Finance minister isn’t impressed and has hinted that Government intends to face the challenge of reviving growth on its own. The RBI cut CRR by 25 basis points. Its decision to keep the key interest rate unchanged led to the indices witnessing a drop not seen for the last three weeks. The Bankex shed over 2%. With Tuesday’s fall, the Nifty has broken out of its trading range we have been mentioning for a while violating the key support of 5630 levels. That level may well turn into a new resistance for the time being.
Market may open flat
Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a flat opening on the domestic bourses. Power Grid Corporation of India announces Q2 September 2012 results today, 31 October 2012. PSU OMCs may edge lower on reports that new Petroleum Minister Veerappa Moily is reviewing the cap on subsidized LPG cylinders ahead of assembly polls in Himachal Pradesh and Gujarat. In a bid to rein in its ballooning oil subsidy burden, the Centre last month fixed a cap on supply of subsidised LPG to six cylinders per household in a year. Moily on Monday, 29 October 2012, took charge as the new Minister of Petroleum and Natural Gas following a major reshuffle of the cabinet announced by Prime Minister Dr. Manmohan Singh on Sunday, 28 October 2012. Assembly polls in Himachal Pradesh are scheduled on Sunday, 4 November 2012. Assembly polls in Gujarat will take place in two phases on 13 and 17 December 2012
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