Sudhakar Shanbhag, Chief Investment Officer Kotak Life Insurance, reacted to the monetary policy announced today.
"Both the equity and debt markets over the last couple of weeks, had built in expectations of a repo rate and CRR cut, based on some initiation of policy action from the government. The RBI’s decision of no change in repo rate and a 25bps reduction in CRR has not lived up to the recent expectations and hence both markets for the day have reacted negatively. Since inflation is expected to remain at a higher level over the next few months before the trajectory goes lower in next calendar year, the RBI has focused on liquidity for the present and has also lowered the growth expectation to 5.8% for FY13.
Form a debt market perspective the overhang of supply and probable slippages in the fiscal deficit numbers are in consideration as also growth moderation which has impacted long term interest rates. The possibilities of future repo rate cuts and possible liquidity support will ensure Gsec prices are supported.
The equity markets from a valuation perspective are in the long term average range and hence can be seen as a buying opportunity from a long term perspective."
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t lived up to the recent expectations and hence both markets for the day have reacted negatively. Since inflation is expected to remain at a higher level over the next few months before the trajectory goes lower in next calendar year, the RBI has focused on liquidity for the present and has also lowered the growth expectation to 5.8% for FY13.
Form a debt market perspective the overhang of supply and probable slippages in the fiscal deficit numbers are in consideration as also growth moderation which has impacted long term interest rates. The possibilities of future repo rate cuts and possible liquidity support will ensure Gsec prices are supported.
The equity markets from a valuation perspective are in the long term average range and hence can be seen as a buying opportunity from a long term perspective."