RBI cuts Repo Rate and CRR by 25 basis points!

What investors and analysts waited with bated breath for a rate cut by the RBI has eventually ended in the positive. The central bank today, after nine months, lowered its policy repo rate by 25 basis points (bps) to 7.75 percent.

Further easing is possible in the future depending on whether the bulbous fiscal deficit is brought under control by the government's upcoming budget or not. The Indian economy has posted its slowest annual growth in a decade. The rate cut is done to boost a decaying Indian economy towards growth as well as controlling a possible flaring inflation. RBI has been cautious in its approach of not affecting external stability with its policy moves.

What was unexpected from the RBI is its reduction of the cash reserve ratio (CRR) by 25 bps to 4 percent. This move will help infuse into the banking system an extra Rs. 180 billion.

RBI Policy Reviews have always been key to move Indian Stock Market like today.

Earning Results Season: HDFC, ITC, and Wipro earnings!

The Indian market is trending much beyond expectations; thanks to the diesel price hike and satisfactory quarterly earnings of a bunch of companies. HDFC and ITC have registered good growth while Wipro earnings did not have much of a positive impact as expected.

It is after four quarters of sluggish growth that ITC registered profit, rising at Rs. 20.5 billion for the quarter ended December 31. Net sales rose to Rs. 76.3 billion at 23 percent. Launch of low-cost products and improvement of cigarette volumes triggered the growth.

HDFC in its Q3 earnings posted registered a 30 percent rise in profits; the triggering parameters are stable asset quality, better fee income, and a higher loan growth.

Wipro earnings, compared to performance of other software giants, did not meet market expectations. Though Wipro posted an 18 percent gain this December quarter, yet its shares slumped high – the highest fall in nine months.

2-year delay of GAAR implementation and inflation dynamics!

The possible RBI rate cut rise scheduled later this January has gathered enough grounds with the country’s headline inflation slowing to its lowest level in three years. India has posted its most sluggish economic growth in a decade and rate cut is one of the boosters to growth. 

Part of the cause of the decaying economy was a fall in investment flows into India last year following India's moves to toughen tax collection by implementing The General Anti-Avoidance Rules (GAAR) from April 2014. The minimal amount applicable to fall under GAAR would be 30 million rupees; investors and companies, routing the said or more amount through tax havens such as Mauritius, are aimed at.

The Finance Minister P. Chidambaram announcing delay of the implementation of GAAR by another two years (i.e., to be effective from April 1, 2016), has had a positive impact in the Indian stock market. The economy may witness moderate boost following capital inflows owing to the move.

Expectations on Tata Motors NSE and TCS stocks

It is good news, to say, the best news for investors of Tata Motors NSE stocks. Yes, the stocks saw a 4.2 percent rise on Wednesday after rising over 5 percent during trade. Thanks to rating upgradation of Tata Motors NSE stocks from ‘underperform’ to ‘outperform’, by Credit Suisse and CLSA, raising hope amongst investors. The company’s sales of the Range Rover series are projected to bump up, especially in countries like China.

As a whole, the Tata Group is estimated to exhibit good growth in the future. Hence, it is no surprise to find investors being equally interested in Tata Consultancy Services NSE stocks. Compared to the same group company’s auto stocks, the IT stocks are far behind when it comes to performance. But they are trending. Like the performance of all other companies, Tata Consultancy Services NSE stocks are also influenced by volatility. Cautious investment is the mantra here!

Sensex and Nifty Performance in the New Year

It is the beginning of a New Year and investors have great hopes from the year 2013. A positive market upbeat prevailed with both the indices of the Indian bourses, i.e. the Sensex and nifty trending for the third day at a stretch. Thanks to hopes of a rate cut by the RBI later this month plus better than expected quarterly earnings, and US ‘fiscal cliff’ negotiations (problems getting postponed, not solved) benefiting global markets.

As projected by market analysts, the year 2013 would no wonder be full of surprises. The year 2012 saw a 25.7 percent gain in the benchmark index. It is to wait and watch! And you never know what the markets have in store. Amid volatility if the sensex and Nifty are trending today, a downtrend is certain soon. Unless government measures are implemented and interest rates paraphernalia be resolved by the central bank, economical growth would be a far fetched affair.