Market Mantra : 14th June, 2013 : Comments by Amar Ambani, Head of Research, India Infoline

bullsbears“It would by a tough policy decision to be made by RBI on Monday in weighing between accentuated growth slowdown, lower wholesale inflation on one side and stubborn food inflation, potential upside risks to inflation outlook due to rupee depreciation, heightened CAD financing risks on the other side. We think RBI has more justifiable reasons to shift into a wait and watch mode on June 17,” says Amar Ambani, Head of Research, IIFL.

On Friday, the bulls charged with a vengeance on Dalal Street aided by a strong bounce back in the rupee and better-than-expected May inflation figures.


The rupee strengthened by almost 49 paise to 57.46 against the dollar. Wholesale price-based inflation fell to a three-year low of 4.7% in May on the back of softening in the price of manufactured as well as primary articles. Headline inflation based on the Wholesale Price Index, stood at 4.89% in April as against 7.55% in the corresponding period of last year.


Banks stole the limelight in today’s session. Market participants seem to have factored in the rating outlook change by Fitch, which has rated the outlook for 10 Indian financial institutions as stable. The list includes SBI, Bank of Baroda, ICICI Bank, Canara Bank, Punjab National Bank, Axis Bank and IDBI Bank.


Beaten down interest rate sensitives like realty, auto, banking and metals stocks were the top performers in trade today. Consumer durables, capital goods and oil and gas stocks too lent support. Even mid- and small-cap stocks contributed to today’s rally.


The Sensex closed up 350 points at 19,177 while the Nifty shut shop at 5,808 up 109 points over Thursday’s close.


He feels RBI has more justifiable reasons to shift into a wait and watch mode onJune 17. “Nevertheless, investors will also have to take note of the FOMC meet on Wednesday which could influence global markets and in turn our indices.”…