Wednesday, October 30, 2013

Mango's take on October 29

Raghuram Rajan raised the repo rate and signaled that he wants to attack inflation and he also made right noises about...

1. Inflation
2. Real positive return for savers
3. Importance for CPI

Meanwhile markets liked it, mostly they expected it as the bankers are gushing about the reduction in the MsF. Also the bankers get extra repo windows in 7-day and 14 - day. The FII's who drive indian markets are going to show new high in next few days ( possibly in 2 days)..will this bring retail investors into share market? I hope not.

Also whatever RBI eased is not going to help the corporate mafia and this will surely help banks to window dress their balance sheet for another 1 or 2 quarters. But surely the end game has begin for Indian banks.

Nationalized banks balance sheets are showing the true situation nowadays. Have a look at Syndicate bank and Maharashtra banks results announced in this 2 since 2 banks has come out with ugly results all the bankers who were waiting in the sidelines to declare their results will come out.

these nationalized bank guys were waiting for some banks to declare results so that their number did not look ugly. Interesting.

Now I think with increasing inflation RBI is gonna to raise REPO every month and it is fun time. Meanwhile the much awaiting festival session is failed as per the preliminary news. But the end result has not come yet...

Let us wait.

Tuesday, October 8, 2013

What is Raghuram Rajan doing?

We all praised RGR for raising Repo rates even though eventually he reduced short term rates in the form of MSF rate reduction last month. He got the benefit of doubt last week. We thought that by signalling Repo rate as primary tool, there may be more repo rate hikes in the offing.

The hawkish tone in the last policy print is commendable. But now things are not that clear especially with the last night MSF rate reduction, he has made reduced the short term rates up to 1.25% which is huge. The lazy Indian bankers will hail this and they will get confident that they can milk RBI further. This is not correct as far as fixing the economy is concerned. Still we want to give benefit to doubt to RGR as he is our only last hope to fix the mess created by RBI under Indian government pressure.

Is he going to raise the Repo rates now? If he wants to that, why not he do that now?He played along with Chidambaram in extending consumer loans at concession rates which a RBI governor should never do. He would have instructed RBI Deputy Governor to go and talk against the idiotic move as he cannot do that :). He may justify that in Indian system that is all we can do. But still??

But he also should know that a lot is expected out of him and he should not wilt under any pressure and he should not walk in the same trap / route in which Subbarao walked/trapped.

Now the onus is on RGR to prove himself as time is running out. The conspiracy theories such as 'RGR is brought into RBI only to buy time and save the corrupt congress govt' will gain momentum unless he acts otherwise to save the sinking ship.