RBI hiked REPO Rate by 0.25%.. RBI governership not meant to win Facebook likes..said Rajan. Nifty managed to close above 6000 mark on weekly basis

20th Sep.2013

Sell off ignited by Mr.Rajan through his debut monetary policy announced today. The central bank has hiked repo rate by 25 basis points to 7.5 percent, but the bank left cash reserve ratio unchanged at 4 percent though the minimum CRR requirement is cut from 99 percent to 95 percent. A very volatile session witnessed more than 600 points' nose down into Sensex after policy announcement and recovered 200 points in the last session. Nifty lost 103.45 points and maintained to close above 6000 mark at 6012.1 and Sensex closed at 20263.71, down by 382.93  points.

All sectoral indices on NSE closed into negative except CNX Pharma which gained 0.2%. CNX Realty was the biggest loser by 7.47% followed by CNX PSU Banks (4.35%) and Banknifty (4.14%).

In Nifty50 stocks, Relinfra was the top gainer by 5.16%, closed at 417.75 whereas DLF tumbled the most by 11.99 and closed at 150.85.

JPAssociat was the turnover topper by the traded quantity and HDFC by the traded value on NSE. Advance/Decline ratio was negative at 2.41 : 1 as 626 stocks declined and 260 stocks gained today on NSE.

Nifty Outlook :

In this week, Nifty traveled from 5798.15 to 6142.5 because of two major events one is international and another is domestic. India Volatility Index rose from 4.78% to 11.52% in a less than a week.(Today's data not considered). So there is a bigger room to play on the bourses. Nifty likely to wander in between 5700 level to 6230 with a buy in dip attitude subject to close above 5930 targeting new high.

Imortant support :  5930

Important resistance : 6090/6145

What is MSF(Marginal Standing Facility) ?

It is the rate at which scheduled banks could borrow funds overnight from the RBI against approved Govt securities. Now since today which is reduced by 0.75%  and the minimum daily CRR balance that banks have to maintain to 95% of the requirement.

Perfectly spoken by the Governor:

“Some of the actions I take will not be popular. The Governorship of the central bank is not meant to win one votes or Facebook “likes.” Rajan, 50, addressed the media with a prepared statement in which he laid out a detailed road map for his innings in the short term, which he called a “big initial package.” “Our task today is to build a bridge to the future, over the stormy waves produced by global financial markets,” he said. Rajan also cited Rudyard Kipling while stating his intent to do the right thing, even amid criticism. “But I hope to do the right thing, no matter what the criticism, even while looking to learn from the criticism,” Rajan said. “Rudyard Kipling put it better when he mused about the requirements of an ideal central banker in his poem ‘If’: If you can trust yourself when all men doubt you, But make allowance for their doubting too: Kipling’s reference to “men” only dates these lines, but his words are clear.”