Why a cut in interest rate by RBI seems very likely on August 2 and other things to expect in the stock markets next week.
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Edited Highlights
2:21 In the past week, in quarterly results we have seen ICICI Bank and Axis Bank bothered by stressed out loans
2:34 Remarkable reduction in net profits for Dr Reddy's due to challenges in the US
2:56 Then, there is ITC which seems to have posted good numbers. This coming after a recent plunge of its stock after the recent GST rate announcement
3:08 Lastly, what do you think will happen on August 2 when RBI meets to decide on interest rates
3:29 This week Nifty also crossed 10,000 points though it remained there momentarily
3:40 Looking at stressed assets of ICICI Bank and Axis Bank, they have still not gone away.The poison is not out of the system yet
3:49 There are many other sectors that are not performing and that is going to start reflecting. For instance, the telecom sector
3:59 The distribution of 4G handsets is going to cause more stress in the sector
4:12 Those who think that banks’ troubles are over are living in a world of fantasy
4:20 As far as pharma companies are concerned, the FDA approvals in the US have increased. The US government is trying to bring down the price of drugs
With approvals the prices of generics are falling in the US. This is the reason why companies like Dr Reddy’s and Lupin under are under pressure
RBI will take its policy decision shortly. All eyes on RBI too bring down the rates, with inflation rate falling. They are also under a lot of pressure and more so since growth is not reviving in the economy
Can 25-50 basis point can really cause such a big difference when the problem is with the demand?
ITC has been doing well despite the GST issue. Here also, there are many small and medium sized enterprises in their value chain which are getting impacted due to GST
The real test for GDP will come when people start uploading their invoices and start filing their return
If the value chain gets impacted, it will start impacting FMCG companies
Looking at the overall scenario, I believe that the investors should be a little cautious
Markets have raced ahead of themselves and should catching breath and correcting
Valuations of the stock markets have gone far ahead of fundamentals
There should be pretty decent correction by the middle of August
