What the RBI did was more or less in line with market expectations. Although a section of the markets and India Inc. wanted a CRR cut, lack of announcement on the same wasn’t a surprise for sure. The rupee remained resilient in the face RBI measures to check speculation. Global markets were also supportive. So, the unexpected selling on Friday afternoon could be more technical in nature. With the Nifty breaching 4700, there could be further downside.
The selling may abate in case of some firm policy action from the Centre or due to stability in external markets. Further recovery in the rupee might also act as a catalyst. With few days left in December, attention may soon shift to next year. Corporate earnings will be tracked closely. RBI’s next move will be eagerly awaited by the markets as well. In the mean time, macro-economic data – both domestic and global – will continue to influence the mood. Further moderation in global commodities, especially crude, will be a positive for India. Imported inflation will soften and deficits may improve.
We expect the coming week to throw some buying opportunities as most stocks are available at cheaper valuations. All eyes are now on the quarterly results for Q3FY12
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