Banking on RBI!

We often have to put up with most from those on whom we most depend - Baltasar Gracian.

The bulls continued their rampage on Indian bourses even as world markets took a breather of sort following Monday’s big rally. At least for the day they may have to put up with the RBI. One only hopes that the RBI doesn’t spoil the party as it takes up a mid-quarter review of its monetary policy today. Expectations are that it will most probably go ahead with another hike before considering a pause.



The start will be flat to slightly lower on indecisive global cues but the finish may be different if bulls have their way. Looks like the liquidity support from FIIs is negating uncertainty on the external front. Stronger-than-expected July IIP data set off the current frenzy. A moderating inflation added to the euphoria. A less hawkish RBI commentary may come more than handy.

Global factors are important as well but of late India has shown a tendency to overlook bad overseas events. FII inflows are robust and are unlikely to see any material reversal. All eyes will be on the next batch of quarterly results next month. So, ride the current momentum but don’t forget that speed thrills but also kills. The Nifty is likely to face resistance around 5880-5900 while near-term support is expected to kick in at 5790.

FIIs were net buyers of Rs22.15bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs9.09bn. In the F&O segment, the foreign funds were net sellers at Rs17.73bn. The foreign funds were net buyers of Rs17.23bn in the cash segment on Tuesday, according to SEBI data. Mutual Funds were net sellers of Rs6.63bn on the same day.

Important News Snippets For The Day:

RIL seeks 25% price rise for KG basin gas.

SBI is in talks with RBI to form a holding company which will control the equity of the bank.

Bharti Airtel will sell telecom towers of its African operations to Bharti Infratel.

Cairn India forms a panel to ensure governance and protection of minority shareholders with regard to the Vedanta deal.

SAIL shortlists six investment bankers for Rs80bn FPO.

Bharti Airtel is all set to start financial services on mobile phones.

TCS has signed US$100mn deal with Supervalu.

Tata Motors global sales were up 29% at 85,114 units in August.

Sun Pharma to make fresh offer to shareholders of Israel’s Taro Pharma to buy remaining shares.

Suzlon Energy subsidiary REpower Systems has bagged an order to supply three turbines to Sweden’s Klagerup Kraft AB.

Reliance Broadcast Network Limited (RBNL)’s Out of Home (OOH) arm, Big Street, has acquired the super premium Line V of the Delhi Metro Rail Corporation (DMRC) for its outdoor advertising activities for a fiveyear period.

Ispat Industries’ arm GONTERMANN-PIEPERS to build 1.2mn tons pellet plant in Chhattisgarh for Rs3bn.

A Punj Lloyd group company has bagged a contract from Saudi Aramco for construction of a pipeline.

Religare is buying 50% stake in Sri Lanka based broking firm, Bartleet Mallory Stock Brokers for US$10mn.

RBI may express reservations with regard to Jet Airways proposed US$750mn ECB proposal.

Indian Hotels to invest US$3bn in various projects.

Shree Renuka Sugars buys additional 7% stake in NCDEX, taking its total holding in the commodity exchange to 12%.

Biocon has entered into an agreement with Teleradiology Solutions to provide teleradiology reporting services to Clinigene.

DB Realty has acquired 100% stake in L&T Bombay Developers, a SPV formed by L&T Urban Infrastructure and Bombay Dyeing, for redevelopment of MIG Colony in Bandra (East).

EPFO announces 9.5% interest rate for FY11.

Indian Inc. pays 15% higher advance tax in Q2 FY11.

August exports rise 22.5% yoy while imports grow by 32.3% to US$29.7bn.

Government to take up 10 fresh SEZ proposals today.

GSM user base grows by 13.5mn in August to 481mn, up 2.9% over July.

State finance ministers are likely to meet on 20th Sept to discuss the constitutional amendments needed to roll out the proposed GST.

The Government won't tolerate any “back door” entries by industry for seeking mines.