A welcome step of RBI in CRR

Reserve Bank of India (RBI) has taken an important step by cutting the cash reserve ratio (CRR) by 0.5% at 5.5%. Cash reserve ratio is a parameter set by RBI for any commercial bank of the country, which indicates the minimum cash any commercial bank must hold. It normally represents the physical cash a bank hold in its bank vault. And at the same time there is no change with the repo rate. It still remains at its original 8.5% stage.

A repo rate is the rate of interest at which RBI lends fund to other banks which is 8.5% and the reserve repo rate is that rate of interest at which RBI borrows money from other commercial banks which is also remain unchanged at 7.5 %.

So a reduction in this CRR rate will enables Rs 32,000 crore flow to the economy or in other words to the market which the banks have to kept as per RBI’s regulation. So this flow will definitely hike the liquidity which was very much awaited.

We can easily notice the positive impact of Tuesday’s announcement by RBI governor D Subbarao on the stock market. The sensex and nifty, two major benchmarks of bse nse of indian stock exchange running with a hike. sensex register a jump of250 points and doing above 17,000 mark similarly with a rise of 80 points nifty is above 5,100 mark.

Regarding the GDP growth rate forecast for the year 2011-12 RBI intends a lower growth rate of 7% rather than 7.6% and tries to barricade the inflation first.

Today 6% CRR is reduced to 5.5% will effect from this January 28, 2012 which was hiked 13 times since March 2010 is definitely a welcome step from the market point of view.

SGX Nifty and its magnitude

SGX Nifty stands for Singapore Exchange Nifty, which is one of the leading exchanges of Asian continents. In todays global village every stock market is some or other way related with each other. As import export is an important section of any economy and every country is becoming more and more liberal for its foreign investors.

Through sgx nifty the international investors of Singapore can invest in bse nse of Indian stock market as sensex and nifty provides these opportunity.

As per the Prime Meridian at Greenwich, England  GMT Singapore is about 2hr 30 minutes ahead of Indian standard time so Indian investors are showing interest in sgx nifty  to reach a more accurate speculation on our market. One more thing that affects interestingly is, in Singapore exchange one can trade for 24 hours in all the seven days of a week so when the Indian markets are close sgx nifty can affect Indian indices, which can change its graph. in other words if there is a hike in Singapore exchange then Indian indices will hike and vice versa, so getting these information like how the Indian market will open before the opening of the market works as a warm up session for the intraday stocks investors.

As Singapore and India are in the same continent so definitely it will have an impact on each other’s market. As Singapore dollar is more valuable than Indian rupee so some Indians investors want to invest in Singapore exchange related to tax issues and according to Singapore governments rule one can invest up to USD 200,000 which is really a good option for Indian investor’s point of view.