Mission Impossible- RBI Protocol!

When you discover your mission, you will feel its demand. It will fill you with enthusiasm and a burning desire to get to work on it.- W. Clement Stone.

Earlier RBI’s mission may have been mostly fighting inflation. For now, the RBI governor has to fight many battles simultaneously as he meets his colleagues to review the monetary policy. The backdrop is quite bleak given the intensity of local and global headwinds; rising government borrowings, falling rupee, slowdown in growth and overseas uncertainty to mention a few.



The RBI is unlikely to cut the repo rate just yet as inflation is still above 9% and core inflation firm. Buzz of a CRR cut has been in the air for a while. It remains to be seen if Subbarao obliges markets on this one. The wording of the RBI statement will be closely analysed.

The start is likely to be indecisive for the Indian markets. US stocks gained on encouraging economic reports. European shares also rose. Asian markets are quiet.

The single-biggest concern of late has been the swift and sharp depreciation in the rupee. The Indian currency is among the worst performers this year. The rupee did rebound on Thursday in late trade. It could continue to recover after the RBI unleashed measures to curb excessive speculation in the forex market.

The euro is also back above $1.30 as well. The dollar index is still above 80 though. Crude oil has softened a bit further. Gold, which has been hammered in recent days, is more or less steady.

FIIs were net sellers of Rs 3.23bn (provisional) in the cash segment on Thursday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 480.9mn on the same day.

The foreign funds were net sellers of Rs 3.06bn (provisional) in the F&O segment on Thursday, NSE data shows.

FIIs were net sellers at Rs 558mn in the cash segment on Wednesday (Dec. 14), according to SEBI web site. Mutual funds were net buyers at Rs2.03bn on the same day.

Global Data Watch: EU Trade Balance and US CPI data.

US stocks rose modestly on Thursday after a fall in weekly jobless claims, a stronger-than-expected rise in regional factory activity and better-than-forecast results from FedEx Corp.

Fitch Ratings, the third-biggest of the major credit rating agencies, has downgraded seven global banks based in Europe and the United States, citing "increased challenges" in the financial markets. Bank of America Corp., Goldman Sachs and Citigroup had their credit grades cut by Fitch.

Barclays, Credit Suisse, Deutsche Bank and BNP Paribas also had their grades lowered by Fitch.