Monday, September 23, 2013

Support 5877

Dear All,

The latest RBI policy in which the RBI has raised the Repo rate is clearly an indication that inflation has become the focus of RBI once again. WPI inflation has consistently risen post May 2013 and would likely go up again as effect of currency depreciation and fuel price hikes are accounted for. This would likely hurt the markets as rate cuts will slower than earlier expected.

BofA-ML expects Government to get into the poll-mode as the November 2013 assembly elections come closer. November assembly elections are in a way bipolar contest between the ruling party at the center i.e. the Congress Party and the principal opposition party i.e. the BJP.

These assembly elections will soon be followed by the General elections in April/May 2014. The global investment bank believe that the government is already getting into the poll mode and any major reforms may not happen now.

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5877 or 78.6% Fib level or Channel Support should be broken for fresh selling, else possible bounce once again can't be ruled out. So lets see.


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