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The second event for September is our own rate cut. The fear is if the US starts offering higher interest rates then the money will move out of emerging markets.Ģ. If they do hike, then we may witness some knee jerk reaction or if it gets postponed to December then a rally. The shadow of whether the Fed will start hiking interest rates in September or December will be clear this week. Let us see how the markets react to this.ġ. This event would be out of the way this week, at least for next 3 weeks. The Risk reward ratio becomes very favorable around 7700-7800 levels to buy.ġ of the major drag on the markets have been the timing of the Fed Rate hike. We cannot catch exact tops or exact bottoms.
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This makes the 7700-7800 region a very strong buying zone. With low inflation, monsoons out of the way, the RBI will definitely cut rates by at least 25 basis points. Monsoons have also picked up in the last part of the Monsoon season. It could also be that we correct 200-300 points to correct the up move and then move ahead.Ħ. Some stocks may have already made their bottoms. Highlight of last leg of down move is that all stocks do not move down equally. My sense is we may see 1 more correction ending around 7200-7500.ĥ. If we break 8200 and go up then we may have broken out of this consolidation phase of more than 6 months. 8200 levels become the key levels to watch out. 1 more down move may be pending or we may breakout of this correction.Ĥ. Right now, technically we are at a very key junction. This may prove as a trigger for the markets.ģ. The RBI may cut rates at their policy meeting on September 29th. The Fed decision is now postponed till at least December. Only if they resume their buying we can see a substantial up move.Ģ. The FIIs continued to be net sellers during the week. What else could take the markets higher?ġ. The uncertainty continues though may be postponed by about 3 months. The much talked about FED Meeting has come and gone. Provided the results are favorable for the BJP, then we may be set for the traditional November to February rally in the markets. After the RBI policy, the next significant event for the markets will be the corporate results after 12th October and then the Bihar election results in early November. Till this trend does not reverse, the market trend will not reverse.ħ.
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The FIIs continued to be strong sellers during the week. Then the 2nd wave up 7723 to 7894 and ongoing. Technically, we may in last leg of the down move, with wave 1 correcting 8055 to 7723 = 332 points. In a nutshell, the market tends to make a significant top after the RBI meet.ĥ. In June, when the RBI Governor actually made the announcement on the scheduled today, the markets actually corrected. At the time of second rate cut, on announcement the markets made a significant top of 9119 on March 4th which has not yet been broken in past nearly 7 months.Ĥ. The first Rate cut was cheered by the markets, it was an unscheduled rate cut. This year the rates have been cut thrice. If there is no rate cut, then the markets will tank immediately. The Governor may not cut rates but give indications that he is inclined to do so in the future.ģ. The markets will rise if there is a 50 basis point cut or a 25 basis point cut with promises from the Governor of more to come.Ģ. A 25 basis point rate cut has been taken for granted by the markets. The Governor will announce on coming Tuesday at RBI Half Yearly Policy, the decision on a rate cut. Let us see what could be the probable outcomes of this meeting.ġ. The RBI policy is scheduled for 29th September and everyone has taken a 25 basis point rate cut for granted.