Market remains worried about a policy mistake: BoAML

However, poor earnings now getting consensus and not seen as big risk to its view of a rangebound market

The quarterly earnings continue to mirror the gloomy prior quarters with the 3rd consecutive ‘near-zero’ quarterly profit growth for the quarter, says a report by Bank of America Merrill Lynch.

However, poor earnings is now getting consensus and is not a big risk to our view of a rangebound market. With the market now near the lower end of our trading range, the risk to this being broken stems from the RBI/government policies to stop the currency depreciation, the report added.

The market remains worried about a policy mistake or at least measures that sacrifice growth in order to protect the currency. We believe raising forex bonds quickly coupled with measures already taken to reduce Current Account Deficit (CAD) could calm the rupee, it said.