Market may be headed for a deep correction

Bulls had built up large positions speculating on a bigger rate cut of 0.5% by the MPC

The Monetary Policy Committee (MPC) cut the policy rates by 0.25 per cent in its review last week. The repurchase rate was pushed down to 6 per cent while the reverse repo was at 5.75 per cent and the marginal standing facility was adjusted to 6.25 per cent. However, the MPC held status quo on the cash reserve ratio (CRR), which remained at 4 per cent. The stock market was disappointed. Bulls had built up large positions speculating on a bigger rate cut of 0.5 per cent and some “super-optimists” were hoping for CRR easing as well. Hence, there was