RBI’s decision pushes markets lower

Blog meant for 3 Aug 2017 Thursday

Dear friends,

Nifty fell by 33 points today. The RBI announced its decision to cut interest rates by 0.25 % today.
Interest rate cuts means that it becomes cheaper (lesser cost) for banks to borrow from the RBI. This will result in banks reducing loan rates and hence making it more attractive for companies and individuals to borrow money and thereby result in better economic activity (business).

Interest rate cut is a positive news for Stock Markets. However, since many investors were expecting a rate cut of 0.50%, markets reacted slightly negatively. Markets could consolidate a bit because of this and then may resume the uptrend. Let us wait and see.
Global cues are all negative tonight.

As per technical analysis, Nifty is in Hold zone. The indications for individual stocks for short term are –

THE HOLDS ARE – Maruti, Yes Bank, Reliance, ACC,  SBI, HDFC Bank, TCS, HDFC, Infosys, M&M,  L&T,  Titan, Axis Bank

 Wait to Sell – Asian Paint

Don’t Buy – ITC, LUPIN, DIVISLAB

Be careful of all short term trades. Although markets are looking very positive, profit booking or consolidation can happen any time unexpectedly.

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Open the following link. It contains an interesting video on how RBI’s interest rates work.

http://www.moneycontrol.com/news/business/economy/rbi-inflation-at-historic-low-but-hard-to-say-if-it-is-transitory-or-structural-2343221.html

All the best!

Dr.Bharath Chandra & Rohan