The market will be more impacted by what the RBI governor has to say as compared to the government or the finance minister, believes Dipan Mehta, member, BSE & NSE. Mehta's views come on the back of the ripple effect being created in New Delhi due to the coal scam.
At this juncture, the market will impacted by what the RBI governor says rather what the finance minister says, believes Dipan Mehta, member, BSE & NSE. Mehta's views come on the back of the ripple effect being created in New Delhi due over coal scam.
Below is the edited transcript of Mehta’s interview on CNBC-TV18.
Q: The profit taking in the market coincided with the Supreme Court (SC) reading the riot act to the government on the CBI showing its affidavit to the law ministry and the prime minister’s office (PMO) before filing it with the SC. Do you think this is going to impact market sentiment in great deal or is the market taking profit simply because there is a lot of profit to take?
A: No, I do not think that all these minor issues with the SC or the government are impacting the market. Market is just taking a pause after having run up so spectacularly over the past 10-12 trading sessions or so. The big story remains cut in interest rates and we have that coming in on Friday. What the Reserve Bank of India (RBI) commentary is, market is focused more on that than what is happening in New Delhi.
Q: Just on the back of these increased allegations of corruption against the United Progressive Alliance (UPA) if they decide to go slow on a little bit of reform, do you think it is going to upset the markets too much, are they expecting a lot from the government even after the parliament session gets over?
A: If anybody in the market is expecting reform from the government after all the political problems which have taken place over the past two-three months, then that is an unrealistic expectation. We are in an election year and one should not expect any reforms at all. The ball is in the court of the RBI governor and what exactly he has to say and what exact policy he follows will have far more impact on the markets than what the FM or the government has to do.
A: A 25 bps has already been factored in and anything more than that in terms of even a cash reserve ratio (CRR) cut will see the stock market rallying up on that news. After that, the next reading is going to be the inflation rate that also will be very important because it will be for the month in which the energy prices have come off.
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