Indian Equity markets staged a smart recovery on Friday . This is in line with the rally in Global markets after Japan central bank cut interest rates to negative. Banks which maintain excess reserves over the stipulated limit will be charged negative interest rates.
This in turn will inject liquidity in the markets. With central banks of EU and China also promising to inject liquidity we may see a liquidity lead rally.
The central bank of India RBI will announce its interest rates tomorrow. Will RBI reward the market with an interest rate cut ?
China PMI came at 49.4 vs 49.7 in December . This continues contraction is a major cause of for concern .
Nity traders can maintain long positions in view of the liquidity situation and forthcoming Budget .
Long term investors can look at enter the market in the beaten down stocks like SBI , ICICI, HDFC . These are strong banks which will benefit from the overall growth story of India.