RBI .5 percent Rate Cut will help the Market- So is Fed going to raise the Rate?

RBI .5 percent Rate Cut will help the Market-So is Fed going to raise the Rate?

• Raguram Rajan has surprised the Market yesterday with .5 % ratecut.
• This Exited the Traders instantly and they moved sensex to 700 point in intraday.
• Buy FII quickly saw the opportunity to exit and brought down the Sensex.
• With India Inflation to remain around 6 % , the best that RBI Governor has is .75 % as the current RBI Rate is 6.75 % at which it lends to Bank.
• Banks keep 2.5 % minimum above this and sell it to us. The cover there expenses and profit in this.
• But currently the economy is weak, despite the rate cut it has not exited the FII.
• This has caused the exit of FII, Also i think RBI Governor would have sensed that the Fed will raise its interest rate in next meeting. So he want to give some cushion for our economy and market.
• So we should carefully watch the Fed meeting next month and see if all going well, then Fed is expected to raise interest rate by .25 %
• Also Bihar elections are being closely looked at as it could affect the Political equation in the country as some more big state are going to election next year.
• So Its a wait and watch game if you are a trader and Accumulate if you are investor.