Ezypt Crisis & Its Impact On Indian Markets

Egypt remains top of the news and as high food prices have been one of the reasons behind the unrest in North Africa, commodity shortages are in focus and that seems to be fuelling investment into commodities. Plus with the Suez Canal being an important shipping choke‐point and the Middle East generally an oil hub, the markets are rightly nervous that the situation in the region could escalate. However, with the Egyptian army saying they will not fight their own people it does raise the prospects for a relatively peaceful solution –however, whether the unrest flows to other countries is a different matter.

Impact on Indian markets

FII selling can take markets down by 10%-15% more, in our view. We will see any decline in stock prices as a buying opportunity to invest in attractively priced growth stocks.

Most of the negatives have been priced in. Were it not for the Egyptian crisis, the market would have seen some consolidation as the fundamentals continue to be positive.

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Market Falls On Credit Policy Revision by RBI

The 30-share Sensex and the 50-share Nifty closed below their psychological levels of 19,000 and 5700 respectively, as investors dumped bank shares. A 5% fall in index heavyweight Hindustan Unilever on the back of lower than expected quarterly numbers, added to the downtrend.

The Reserve Bank of India today raised repo rate--the rate at which it lends to banks--and reverse repo rate--the rate at which it borrows from banks--by 25 basis points each, as it tried to check the surge in inflation. A section of the market was expecting the RBI to raise key rates by 50 basis points, as the rapidly rising inflation is now threatening to undermine economic growth.

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India, An Economic Power House: IMF

Source: Business Standard

MF Managing Director Dominique Strauss-Kahn today described India as a “leading power” and an “economic powerhouse” going by the performance of the economy.

“Your result here in terms of economic growth and also in terms of inclusive growth are really amazing”, he told reporters after a meeting with Finance Minister Pranab Mukherjee.

“We had a very frutiful discussion and relationship between India and the IMF is expanding”, he said on the meeting with Mukherjee.

“India is becoming one of the leading power in the world. It is really an economic powerhouse”, he said.

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