Published on 25/06/2019 9:08:31 AM | Source: HDFC Securities Ltd

Promised RBI Tonic Delayed - HDFC Securities

Posted in Market Outlook| #Market Outlook #HDFC Securities

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The Bimal Jalan Committee will now present its report on transfer of excess RBI capital to the Government in MidJuly. That means later than the Budget.

This is not good for the markets.

While the news was out yesterday during market hours and has been partially discounted by the markets, it is a delay that could have been avoided. That the Government needs this excess capital was never in doubt. A first year economist student would know that front loading of infusion requires less capital than piecemeal investment of funds. So what’s the fuss all about?

Had the report come in on time, no questions would have been asked on FM’s fiscal deficit numbers. Now she will have to assume numbers that will give the doubting Thomasses an opportunity to question the numbers.

The Nifty did go down yesterday to 11,670 and then bounce back to 11,699.

Let’s look at the scenario. There is no doubt that more capital would be returned now than what have been the number had the report come on time. Secondly, there is good chance that the capital would come in less number of tranches if not one.

While there would be some delay, but it should be worth the while.

The Global markets are just drifting lower after U.S. put further sanctions on Iran.

The global eyes are glued to the couple of meetings in the next 7 days.

First is the G-20 meet in Osaka where Trump and Xi will discuss trade on the side-lines of the summit. The other is the OPEC meeting on 1st and 2nd July, where they are expected to announce further cut in crude oil.

Traders will also keep a close eye on Federal Reserve Chairman Jerome Powell, who discusses monetary policy in a speech in New York later today.

Coming back to our markets, the highest OI, which was at the 11,700 has now shifted back to 11,500. This indicates weakness.

The markets are likely to retest the 11,670 low seen yesterday. For the settlement, we think the level of 11,620 seen earlier this month could hold, but nothing is caste in Iron.

The Rupee could open 7 paise in the green, while the Nifty would open flat.


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