9: 20 am Indian markets opened in the red today as the new Reserve Bank of India chief Raghuram Rajan makes his first monetary policy statement at 11 am today with expectations he may scale back some of the emergency measures that have helped the rupee bounce from a record low.
While the BSE Sensex opened 0.40 percent lower at 20561, Nifty opened down 0.34 percent at 6096. Market experts have advised investors to book profits and reshuffle their portfolio today after the RBI announcement. The rally on Thursday was one of the biggest in recent times and any cooling will only be healthy for the market. Even the rupee opened weak at 62.09 against the USD against Thursday’s close of 61.71. On Thursday, the rupee surged as much as 2.8%, hitting its highest in a month as Ben Bernanke’s surprise decision on Wednesday not to wind down its monetary stimulus has come as a shot in arm for Rajan. However, the Fed’s decision also means that expectations from Rajan have risen manifold. “There is certainly the danger of a more relaxed stance from the policymakers till the next round of tapering concerns hit the markets. They should just see this as a 2-3 months reprieve,” said Robert Prior-Wandesforde, economist at Credit Suisse in Singapore. “The RBI should not use this to ease monetary conditions.
The rupee has only retraced a month’s losses and is certainly not strong or stable. My sense is RBI will not touch the key rates but the tone will be somewhat more dovish,” Prior-Wandesforde was quoted as as saying by Reuters. The principal economic adviser at the Ministry of Finance, Dipak Dasgupta, said the Fed decision “was a huge surprise” and a “very positive decision.” He said it could add half a percentage point to India’s economic growth in the near term. Rupee opens weak at 62.09 as cautious market awaits Rajan’s maiden policy 9:00 am The US Fed move to keep liquidity taps on has driven financial markets across the world to new highs; and India is no exception. Indian equity markets surged to their highest level in nearly three years on Thursday, led by banks, after the US Federal Reserve stunned markets by delaying plans to cut asset-purchase programme. The rise was in tune with global markets.
Foreign institutional investors (FIIs) bought equities worth $574 million on Thursday. FIIs had bought equities worth $1 billion up to the FOMC’s meet. According to a report in the Business Standard, of the $4-billion selloff since May, Indian equities have already recouped $1.6 billion. However the markets today may open flat today as it waits in anticipation for RBI’s Monetary Policy today as the new governor Raghuram Rajan makes his debut. The currency markets too seem cautious this morning as the rupee opened 32 paise weaker at 62.09 against the US dollar after closing at 61.78 on Thursday. Rajan is expected to hint at some rollback of measures imposed in defence of the rupee while key policy rates may be left unchanged. “There is a change of guard, so we don’t know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery,” said Rajeev Malik, senior economist at CLSA in Singapore. Finance Ministry has expressed hope that Reserve Bank of India (RBI) will focus on promoting growth. Meanwhile, US stocks retreated slightly on Thursday as investors paused after the Federal Reserve’s decision to keep its stimulus intact sparked a rally that lifted the Dow and S&P 500 to record highs.
While the BSE Sensex opened 0.40 percent lower at 20561, Nifty opened down 0.34 percent at 6096. Market experts have advised investors to book profits and reshuffle their portfolio today after the RBI announcement. The rally on Thursday was one of the biggest in recent times and any cooling will only be healthy for the market. Even the rupee opened weak at 62.09 against the USD against Thursday’s close of 61.71. On Thursday, the rupee surged as much as 2.8%, hitting its highest in a month as Ben Bernanke’s surprise decision on Wednesday not to wind down its monetary stimulus has come as a shot in arm for Rajan. However, the Fed’s decision also means that expectations from Rajan have risen manifold. “There is certainly the danger of a more relaxed stance from the policymakers till the next round of tapering concerns hit the markets. They should just see this as a 2-3 months reprieve,” said Robert Prior-Wandesforde, economist at Credit Suisse in Singapore. “The RBI should not use this to ease monetary conditions.
The rupee has only retraced a month’s losses and is certainly not strong or stable. My sense is RBI will not touch the key rates but the tone will be somewhat more dovish,” Prior-Wandesforde was quoted as as saying by Reuters. The principal economic adviser at the Ministry of Finance, Dipak Dasgupta, said the Fed decision “was a huge surprise” and a “very positive decision.” He said it could add half a percentage point to India’s economic growth in the near term. Rupee opens weak at 62.09 as cautious market awaits Rajan’s maiden policy 9:00 am The US Fed move to keep liquidity taps on has driven financial markets across the world to new highs; and India is no exception. Indian equity markets surged to their highest level in nearly three years on Thursday, led by banks, after the US Federal Reserve stunned markets by delaying plans to cut asset-purchase programme. The rise was in tune with global markets.
Foreign institutional investors (FIIs) bought equities worth $574 million on Thursday. FIIs had bought equities worth $1 billion up to the FOMC’s meet. According to a report in the Business Standard, of the $4-billion selloff since May, Indian equities have already recouped $1.6 billion. However the markets today may open flat today as it waits in anticipation for RBI’s Monetary Policy today as the new governor Raghuram Rajan makes his debut. The currency markets too seem cautious this morning as the rupee opened 32 paise weaker at 62.09 against the US dollar after closing at 61.78 on Thursday. Rajan is expected to hint at some rollback of measures imposed in defence of the rupee while key policy rates may be left unchanged. “There is a change of guard, so we don’t know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery,” said Rajeev Malik, senior economist at CLSA in Singapore. Finance Ministry has expressed hope that Reserve Bank of India (RBI) will focus on promoting growth. Meanwhile, US stocks retreated slightly on Thursday as investors paused after the Federal Reserve’s decision to keep its stimulus intact sparked a rally that lifted the Dow and S&P 500 to record highs.
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