RBI Monetary policy: No repo rate cut as expected by Bond market…
The following was published in “The Financial Waves STU” on 30th October 2012 before equity markets opened by Waves Strategy Advisors. For more information visit
The following was published in “The Financial Waves STU” on 30th October 2012 before equity markets opened by Waves Strategy Advisors. For more information visit
Bottom Line: Nifty sustained above the
support of 5620 and formed blue bar. Reaction to RBI monetary policy will
provide further information.
12M Government
Bond Yield:
Above is the chart of 12 Month Government Bond yield. We use this chart to predict the next action
of RBI monetary policy on repo rate. Generally, Bond markets act as a leading
indicator for the government action. Last policy was announced on 17th
September 2012 in which we have been right on no rate cut in repo rate.
Looking at chart we find no major movement in 12M bond yield and hovering
near 7.95. In the last monetary policy bond yield were moving near same level
and we did not have repo rate cut. So it is highly possible that todayRBI will
not cut repo rate in monetary policy.
It will be important to observe if Bond markets have been right even this
time in predicting no repo rate cut and the reaction by equity markets after
the announcement.
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