– As already posted on the blog, Liquidity is the main concern now and the Govt has realised it. Last few month where the interest rates were on the declining trend globally we saw continuous hikes which literally squeezed out the money from the hands of public. Public pulled out money from the markets so as to invest in the FD’s which gave return of 10 – 11.5% and many started feeling why take risks in stocks when they get this high return in a FD compared to just 2% in US.

– MFF had already written many times in the past as well that high % rates in India will also see flow of FII money into Debt and that happened exactly. There is lot of scope for reducing the lending rates and RBI should not hesitate to reduce them since it has already been proved that just high rates cant control inflation.

– This has been said in the earlier posting and is being repeated again… Sensex looks like will bottom out here. The valuations are at pe of just 10 – 11 and buying can easily come in if money is injected by the RBI. Market at worst case scenario looks like can touch 2840 on Nifty, though most probably it should consolidate here for few months till elections.

– The day we see lending rates being cut pouch for the Bank stocks.

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