Shares of interest-rate sensitive sectors such as banking, automobiles and realty are trading lower after the Reserve Bank of India (RBI) has kept the repo rate, cash-reserve ratio unchanged.
Punjab National Bank, Canara Bank, IndusInd Bank from banking, Bajaj Auto, Hero MotoCorp and Tata Motors from auto and DLF, HDIL and Unitech from realty sector are down 1-4% on the Bombay Stock Exchange (BSE). The BSE Realty index was the largest loser falling 2%, while auto and banking index are down 1% each at 1150 hours.
“It has been decided to keep the repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25%. The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 6.25%,” RBI said in a statement.
The Central Bank said that the current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance.
However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we have to forfeit some monetary policy discretion to address external sector concerns, it added.
Punjab National Bank, Canara Bank, IndusInd Bank from banking, Bajaj Auto, Hero MotoCorp and Tata Motors from auto and DLF, HDIL and Unitech from realty sector are down 1-4% on the Bombay Stock Exchange (BSE). The BSE Realty index was the largest loser falling 2%, while auto and banking index are down 1% each at 1150 hours.
“It has been decided to keep the repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25%. The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 6.25%,” RBI said in a statement.
The Central Bank said that the current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance.
However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we have to forfeit some monetary policy discretion to address external sector concerns, it added.