Wednesday, January 16, 2013

All problems solved now - expect rate cut

The week gone by was very interesting.

A lacklustre result from Infosys caused the share price to jump above 20% in a matter of couple of days. Ironically this company is on the downhill.

The WPI inflation of 7.2 % is greeted by market although the CPI inflation of over 10%. Everybody discounted the rate cut by RBI. Now it is the question of whether it is .25 or .50.

Mangomen in the street is made to believe that it is in his best interests the rate cut is going to be done. Because government thinks every mango man in the street is invested in stocks and real estate. The mangomen who are not invested in these two assets classes are not having a say  in government policies and officially raped by Indian government. Sadly majoirity of population falls here. So effectively Indian government is working against majority of its people.

Now coming back to RBI, Subbarao would have realised how dangerous it is to commit to rate cut on a certain date. Now he has fallen into his own trap and will be forced to cut rates January end. And here after every review he will have to cut rates to stock growth. How pity?

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