This bull market has legs, but time is ripe for some correction

The domestic equity market opened with a gap up and the Nifty50 broke the strong resistance at 9,200 on the back of constant FII buying, which has even continued in the new financial year.

The big event of the week was RBI money policy review on April 6, in which the monetary policy committee unanimously agreed to keep the repo rate unchanged, but hiked the reverse repo rate by 25 basis points from 5.75 per cent to 6 per cent.

This will give a big respite to banks, especially PSU banks, which are sitting on huge liquidity, which will now make them earn more by 25 basis points extra. This will also compensate for the losses incurred due to rising bond yields.

Newly appointed Uttar Pradesh Chief Minister fulfilled the election promise by waiving off of over Rs 36,000 crore farm loans. This flies contrary to prudent fiscal discipline as highlighted strongly by the RBI Governor. Considering the size of Indian banks, the loan waiver will not have deep any impact in the long run.

Events of the Week

Air strikes by American Forces on Syria caused a spike in oil prices. This was an unexpected change of stance by US President Donald Trump on Syria, where he had refrained from interfering earlier. However markets across the world reacted maturely and side-stepped the issue, at least temporarily. The merger of SBI and associated banks went through in record time, an unheard practice for the government machinery. This will lead to a round of consol ..

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