The January 2012 IIP print at 6.8% (against market expectation of around 2%) caught the market in a dizzy, unable to believe its eyes and ears. The sharp jump was shown to be driven by over 42% growth in consumer non-durable items (which has grown at an average of 7% this current fiscal). Defintely, something is wrong somwhere! The data management authorities need to put filters to avoid these kind of excessive swings in numbers.
There was no impact in the stock market as NIFTY stayed steady around 5350 but Bond market fell on fear that rate cuts may be distant away backed by this robust (!?) growth pick-up. 10Y bond yield was up into 8.30% giving good opportunity to stay invested into mid quarter review of the policy.
Would continue to expect 50 bps rate cut on 15th March 2012 as RBI's focus stands shifted from liquidity to cost of liquidity. There may not be CRR cuts till July 2012 policy and RBI would use OMO option as and when needed; thus pushing the LAF corridor to 7-8% and maintaining operative policy rate at higher end (overnight MIBOR at 8.10-8.25%) till July 2012 is considered sensible and growth supportive stance.
Dont panic on higher bond yields.....the next 7-10 days is the time to invest for good returns on shift into FY13.
Moses Harding
There was no impact in the stock market as NIFTY stayed steady around 5350 but Bond market fell on fear that rate cuts may be distant away backed by this robust (!?) growth pick-up. 10Y bond yield was up into 8.30% giving good opportunity to stay invested into mid quarter review of the policy.
Would continue to expect 50 bps rate cut on 15th March 2012 as RBI's focus stands shifted from liquidity to cost of liquidity. There may not be CRR cuts till July 2012 policy and RBI would use OMO option as and when needed; thus pushing the LAF corridor to 7-8% and maintaining operative policy rate at higher end (overnight MIBOR at 8.10-8.25%) till July 2012 is considered sensible and growth supportive stance.
Dont panic on higher bond yields.....the next 7-10 days is the time to invest for good returns on shift into FY13.
Moses Harding
No comments:
Post a Comment