06 Jun 2025 — Nifty reclaims 25000 + RBI cuts repo rate by 0.5% + PostMortem Report
Nifty Stance Bullish ⬆
First of all, a big sorry for not posting in the last2 months. No, it was not because I wasn’t trading; it was because of some other good news. I got a contract to write a new book on “How to learn mutual funds in 30 days,” and I was working on that manuscript night and day. I wrote almost 45 chapters, and I hope around 90% of the work is done.
Coming back to Nifty trading, look at the red and green arrows. I have simplified my chart to show only 2 EMAs and the crossovers indicate whether we are long or short. On 28th May, we went with a short trade and yesterday, 5th of June, we went long.
Markets discount everything, and the reason we went long was proven correct today when the RBI Governor made the following changes.
- Repo rates cut by 0.5% to 5.5%
- Policy stance is now neutral instead of accommodative, which means further rate cuts may be ruled off.
- CRR to be cut by 0.25% x 4 times to a total of 1%
- The total liquidity infusion is expected to be around 2.5 lakh crores.
This is a phenomenal achievement for the Indian equity markets, as lower repo rates would mean the borrowing is going to get cheaper. For everyone in India, its good news too as the loans become cheaper and small-medium scale business owners feel safer to borrow to expand their businesses.
The issue comes in the Indian debt market and our debt market is not small by any means whatsoever. I guess we are managing close to 2.5+ trillion USD in debt. The real problem is the spread in interest rate of the US fed rate (4.55%) vs our repo rate (5.5%), i.e. 1% gap. No foreigners would be enticed to invest in India as the US market, plus its dollar appreciation capability, reigns supreme. Well, if the US FED cuts its rate further, we may be able to maintain the status quo.
Coming back to our markets, our stance is now bullish, and we will wait for the EMA to cross for a status change.
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