All Eyes Stay Close On Guv: Will He Or Wont He

The Consumer Price Index (CPI) based retail inflation dropped to 5.18 per cent in February 2016 as compared to 5.69 per cent in January 2016.The inflation data is giving headroom for rate cut by Reserve Bank of India (RBI) in upcoming April 5, meet. RBI governor Raghuram Rajan clarified that the central bank will work on government’s fiscal deficit to 3.5 per cent of GDP. The governor is likely to keep CPI within 5 per cent as on March 2017. The Indian stock indices rose by 1.76 per cent in last fortnight.

Foreign Institutional Investors (FIIs) are bullish on Indian equity market after the Finance Minister tabled Union Budget for FY17. The FIIs net equity buying stood at Rs 9559 crore during last two weeks. However, Domestic Institutional Investors (DIIs) net investment in equity markets stood at Rs 5578 crore in last fortnight.

Considering sector wise, all sectors raised by one and half per cent contributing to incremental Nifty and SENSEX indices.Meanwhile though the realty bill passed into Rajya Sabha, the Realty index surged by 1.97 per cent. The Auto sector is in focused and increased by 3.24 per cent and positive sentiments on RBI’s upcoming rate cut which in turn will boost demand for automobiles. The Metal index 4.09 per cent in last fortnight as commodity base metals prices increased in commodity exchange.

Last fortnight, the central bankers around the world trying to oversee the global financial market situation and respective monetary policies.The stock market across the globe remained under pressure.

The European Central Bank (ECB) has cut interest rates and expanded its asset purchase program to 80 billion Euro (USD 88 billion) a month in a bid to boost inflation and reinvigorate a stuttering eurozone economy. The Central Bank has cut its deposit rate to minus 0.4 per cent and its main interest rate to zero. The European central banker also clarified that further interest rate cut would happen only when uncertain conditions. The European stock indices remained mixed on ECB meet. The FTSE remained flat whereas DAX and CAC 40 surged by 2.23 per cent and 1.49 per cent in last fifteen days.

The Bank of Japan (BOJ) downgraded its view of the economy but maintained status quo by holding interest rates at minus 0.1 per cent. The decision came after January’s unexpected move towards negative interest rates. Further, there would be possibility that BOJ may bring the rate down to minus 0.5 per cent, if global financial crisis threatens the economy. Meanwhile, the Japanese stock index Nikkei increased by 6.41 per cent to 17117 in last fortnight. Surprisingly the steady interest rate boosts the sentiments of investors and stock index surged in last couple of weeks.

After BOJ meeting, the market remained cautious as attention diverted to Federal Reserve meeting on March 16. However after the recent improvement in US economic data, we believe the Fed will stabilise interest rates.

Iran is already denying with OPEC leaders, and it's having a major impact crude oil prices in last fortnight. During the start of New Year, Iran has repeatedly ignored pleas from OPEC members like Saudi Arabia, Qatar, and Venezuela to keep output steady in order to boost prices. Though there is only meeting happening on oil production freeze and production cut yet to take place. The oversupply of crude oil will remain intact in coming future. Therefore, the global stock markets are worrying on crude inventories.