RBI Cuts Rate - But Was It Enough?

Phew! What a grueling day in market today!! It has been a sea of red. Financials have been butchered with bears taking a firm grip.

Reason was simple and clear. Markets were expecting a 50 bps cut in repo rate but Raghuram Rajan delivered only 25 bps cut. This despite the fact that our Fin Minister himself had publicly indicated that he expected a 50 bps cut in repo rate from the Central Bank.

Nonetheless, why such despondency was witnessed in markets today? After all a rate cut was given by RBI and some liquidity measures were initiated. Why should a rate cut, however small, impact the markets so negatively?

I think the reason is that market participants wanted to send a message to Raghuram Rajan. And the message is that they do not appreciate his negative approach to growth.

To be frank, RBI Governor's actions have always been suspect, as if he is totally against growth in India. Take the instance of present situation as it exists in Indian economy. By his own admission today, RBI Governor is seeing consumer inflation at 5%, which is fairly pleasant as inflation goes. If inflation is under control, then it is high time to address the growth of economy which is in doldrums.

For kick-starting growth in Indian economy, we need job creation. Jobs can be created if industry goes into capex drive, meaning that capital expenditure has to be resorted to by industry captains to build extra capacity. Building extra capacity will require fresh jobs, which in turn will boost domestic consumption, thereby inviting more job creation and thus sending Indian economy into a virtuous path of positive growth spiral.

How is it so difficult for Raghuram Rajan, an economist of world renown, to understand? And when situation is so conducive from inflation side, it is simple to drive growth by substantially lowering rates. Industry has to be incentivized by lower rates so that they can borrow funds from banks and create extra capacity through capital expenditure.

This is what the markets had expected form RBI Governor and did not get. 25 bps rate cut is next to nothing. In fact some market watchers were expecting 100 bps, but 50 bps was the rock bottom expectation. Even after Finance Minister publicly hinting at 50 bps, Raghuram Rajan just could not care less for growth in Indian economy. This is at a time when Govt has done everything possible for fiscal consolidation.

Wonder who exactly is Raghuram Rajan working for? India's growth has suffered a lot at Raghuram Rajan's hands. As his term comes to an end this September, we hope to get a more positive RBI Governor to guide India with proactive monetary policies.

Trades Entered - RBI Rate Cut Eyed Eagerly

Bull charge is on!

In my last post, I had given 20 scrips to enter trade today.

However there are some trades which we could not enter. Buy price given in 10 scrips were not met in trade today.We will discuss about these scrips later. We need to review our entry in these scrips.

 These scrips are JINDASTEL, INDIACEM, TATAPOWER, CANBK, RPOWER, UNIONBANK, ANDHRABANK, BANKINDIA, ORIENTBANK, SYNDIBANK

Today we could enter into ten trades at my given buy price. These are mentioned below :-

HEXAWARE :  Bought at 268, Closed at 254.2
BANKBARODA:  Bought at 150, Closed at 151.75
KTKBANK   :  Bought at 104, Closed at 104.35
UCOBANK  :  Bought at 40, Closed at 40.25
LT&FH  :  Bought at 65, Closed at 65.15

ALBK    :  Bought at 57, Closed at 56.9

IDBI      :  Bought at 71, Closed at 71

PNB       : Bought at 87, Closed at 87.25

SBI    :  Bought at 195, Closed at 195.8

IOB       : Bought at 30, Closed at 29.9

In all these trades, only Hexaware has behaved negatively and hence needs to be watched carefully. If you have entered into Hexaware trade at 268, then you should exit as and when Hexaware touches 270.

Indian Stocks in Radar - Buy Buy Buy!

Those who followed my advice would be quietly sipping  a refreshing cup in complete peace. After all trading just one lot of SBI for a fortnight has given them Rs 30000/- in profit from an investment of Rs 75000/-

Now I will give you recommendations to a basket of scrips which will give handsome profit in coming days. All these scrips should be traded in April Futures contract.

Hexaware : CMP 270.1, Buy- 268, tgt - 278.

Jindalstel : CMP 63.95, Buy- 62.5, tgt - 72.

Indiacem : CMP 89.15, Buy - 87, tgt - 95

Tatapower CMP 65.5, Buy 64, tgt-70

Rpower CMP 50.5, Buy 50, tgt - 54

L&TFH CMP 66.05, Buy 65, tgt - 70

IOB CMP 30.6, Buy 30, tgt - 36

Canbk CMP 199.7, Buy 194, tgt - 220

PNB CMP 88.25, Buy 87, tgt - 100

SBI CMP 197, Buy 195, tgt - 220



RBI policy review on 05 Apr 2016 will give tremendous boost to Indian markets. If RBI announces rate cut of 50 basis points, then all the stocks discussed so far will get turbo-charged. There will be mad rush to join the herd.

But maximum focus will be in the following scrips, which to will give very high returns :-

Andhrabank CMP 55.85, Buy 53, tgt - 65                  

Bankindia  CMP 100.9, Buy 98, tgt - 120

Ucobank CMP 40.95, Buy 40, tgt - 45

Ktkbank CMP 105.3, Buy 104, tgt - 120

Albk CMP 58.05, Buy 57, tgt - 67

Bankbaroda CMP 153.3, Buy 150, tgt - 170

Orientbank CMP 96.8, Buy 94, tgt - 110

Syndibank CMP 71.5, Buy 67, tgt - 85

Unionbank CMP 140, Buy 134, tgt - 160

IDBI CMP 72.85, Buy 71, tgt - 80


Note : If there is very strong opening in markets on Monday, then buy at higher levels than indicated in this post.

Profit Realized - SBI Apr Futures

 

We have again got it right on target. In yesterday's post I had advised you to exit SBI Apr Futures within the first 30 mins of trade today. Check the blog post here.  I think we all could exit this position around 198.

In today's session SBI Apr Futures opened at 198.45 and it made a day high of 199.3, which makes me sure that all could at least exit near 198.

Time to calculate profit. We bought this lot of SBI Apr Futures at 190 ( check my recommendation here) and sold it at 198.

Profit from one lot of 2000 shares costing Rs 75000/- is (198-190= 8)X2000 = Rs 16000/- This trade has given Return on Investment as 16000/75000X100 = 21.3% in 4 trading sessions.

 For the moment let us wait and watch how things pan out in the markets. Today derivatives March expiry trades have been executed and tomorrow will be a fresh start with April contracts.

Tomorrow we will not enter trade. But if SBI Apr Futures is available at 186/188, then we should go ahead and buy it.

SBI Swings to Victory - Has Vijay Mallya Helped?

In today's trading session you have come out victorious after enduring tough conditions and some scary moments.

In last post I had assured you that there was no cause to worry about one position of SBI Mar Futures bought at 196. I had also asked you to square this March contract at 197/198. 

Well today SBI Mar Futures reached a day high of 198.7

By squaring off one lot SBI Mar Futures you have realized a profit of Rs 4000/- since it was bought at 196 and sold at 198 and the lot size is 2000.

That is not all. Icing on the cake is position of SBI Apr Futures we had picked up as recommended in this post. We bought this position at 190 on 28 Mar 2016.

Today SBI Apr Futures closed at 198.7 and this means that this position is presently offering you an unrealized profit of (198.7-190 = 8.7) X 2000 = Rs 17,400/-

I think we need to lock in such profit at the earliest. So now my recommendation is that as markets open tomorrow we should exit this position within first 30 mins of trade.

I wonder what gave fillip to banking sector in today's session. Could it be promise of Vijay Mallya to return Rs 4000 crores to banks by Sep 2016? Yes I do wonder!