Today, the key indices are primed for further gains on the back of RBI’s latest monetary offensive and a rebound in global equities. The advance may be temporary though, given the multitude of headwinds confronting us.The banks will have to do something with the money they hold. The RBI has finally blinked and cut short-term rates by 50 bps in its continuing bid to nudge banks to lower borrowing costs.
But, the real issue is not with supply (liquidity), but the sluggish demand. Customers and banks continue to be risk averse. It is the crisis of confidence which is plaguing the markets, not only in India but across the world. Unless there is a reversal in this trend, we are unlikely to see a sustained advance in stocks.
Alternate bouts of buying and selling often tossed the benchmark index in positive and negative terrain. Even a positive start to equity markets across Europe had a minimal impact on the sentiments today.
