Tuesday April 30, 09:00 AM
Politics takes center stage... |
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By Equitymaster.com
It was an eventful day yesterday. While a 50 basis points reduction in CRR resulted in sharp selling in banking stocks, arrest of two key official of the Reliance (RELI.BO, news) Group pushed the markets into the red. While markets are expected to recover, political uncertainty has taken yet another focal point.
The Union Coal and Mines Minister, Mr. Paswan, along with three others have resigned from the cabinet and withdrew his support for the NDA government in light of the dissatisfaction over handling of the Gujarat issue. The Prime Minister has clearly failed to take proper action against the ruling Gujarat government, which failed to take any action to curb violence. The Godhra incidence is still taking toll of common residents. The state has been having a disastrous time ever since the earthquake last year. Following Mr. Paswan's withdrawal there are fears that other coalition parties might join the bandwagon. The opposition party, The Congress, is taking advantage of the situation and Mrs. Gandhi's speech at CII's conference highlights the party's standing on this issue.
While political uncertainty might continue to affect sentiment on the bourses, there is not much positive news from the recent quarterly performance of India Inc. Except for few companies, profit growth has remained subdued. At the same time, there is not much encouragement from the US markets with Dow trading below 10,000 levels.
But RBI in its monetary policy has stated that the Indian economy would grow by 6%-6.5% on the back of a manageable inflationary environment. The monetary policy 2002 addressed more structural issues to bring in more transparency and stability to the financial system this time, which has been its long-term objective.
The next biggest trigger for the markets could be divestment of IPCL for which three companies have submitted bids. Along with IPCL, some news can be expected on divestment of Maruti as well.
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