RBI liquidity measures cheer markets; Sensex up 327 pts, Nifty tops 11,900

All that happened in the markets today

The Nifty50 index settled above the 11,900-mark at 11,914, up 80 points, or 0.67 per cent. (Photo: Kamlesh Pednekar)

12:26 PM

Views on RBI policy by Anuj Puri, Chairman – ANAROCK Property Consultants

With real estate demand gradually seeing some green shoots of revival, especially in the wake of reduced stamp duty charges (in Maharashtra) and developers discounts and freebies, reduced repo rates would have given an added boost just before the upcoming festive season. But with consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also being substantially reduced by 140 basis points in 2020, today’s move was expected.

On a positive note, RBI’s move to rationalise risk weightage on home loans and linking housing loans risks only to loan-to-value is a welcome move. This announcement thus will definitely encourage banks to lend more to individual homebuyers without feeling the stress on their balance sheets.

12:16 PM

HDFC, LIC Housing, CanFin Homes: RBI measures likely to keep stocks buoyant

Shares of banks and non-bank finance companies, including housing finance, gained ground on Friday after the after the Reserve Bank of India (RBI) announced liquidity boositing measures while keeping the key rates unchanged. LIC Housing Finance, Mahindra & Mahindra Financial Services, Indiabulls Housing Finance, PNB Housing Finance, Housing Development Finance Corporation (HDFC) and Repo Home Finance were up 4 per cent to 9 per cent in intra-day trade today. READ MORE

Housing finance, loans, home, NBFC, IBC, realty, real estate

12:03 PM

ASSOCHAM'S view on RBI policy announcement

The Reserve Bank of India's Governor Shaktikanta Das announcement of keeping the repo rates unchanged while forecasting a 9.5 per cent contraction in FY21 was on expected lines stated ASSOCHAM president, Dr. Niranjan Hiranandani.

The RBI’s decision to keep key rates unchanged was also much anticipated. “Further reduction in key interest rates was not a possibility at this juncture. The RBI’s decision to extend the scheme for co-lending to all NBFCs, HFC in respect of all eligible priority sector loans will allow greater operational flexibility to the lending institutions and is much welcomed,” he said.

12:00 PM

MARKET UPDATE:: Broader indices underperform benchmarks

11:48 AM

InterGlobe Aviation advances 5%, hits over seven-month high

Shares of InterGlobe Aviation (IndiGo) moved higher by 5 per cent, hitting an over seven-month high of Rs 1,393 on the BSE in intra-day trade on Friday. The stock of the airline company was trading at its highest level since February 26, 2020. In the medium-to-long term, once the Covid-related crisis is over, the demand outlook for aviation remains very strong in India, largely driven by under-penetration, rise in the working population, and expansion of the middle class, the company said in its annual report. READ MORE

indigo, airlines, aviation, flights, air craft

11:36 AM

Top gainers on BSE at this hour

COMPANY	PRICE(rs)	CHG(%)
LIC HOUSING FIN.	313.70	9.44
S H KELKAR & CO.	91.45	7.02
CAN FIN HOMES	466.95	6.19
VARROC ENGINEER	329.80	6.08
THYROCARE TECH.	1081.40	6.00

» More on Top Gainers

11:29 AM

Quote on RBI policy by Abhimanyu Sofat, Head of Research, IIFL Securities

“Despite not cutting benchmark interest rate, RBI has announced a significantly dovish monetary policy will slew of measures. Doubling of the size of open market operations to Rs 20,000 crore, RBI participation in state development loans, allowing co-origination of loans by HFCs are combined big-ticket announcements for both bond market and financial sector stocks. Housing finance companies, small NBFCs are likely to outperform as a result of these announcements. RBI is expecting a significant fall in inflation in H2 which has been higher due to supply chain challenges to justify its dovish stance. Extension of HTM limits by an additional one year, on tap TLTRO, are going to provide significant relief to the bond market. Investors can increase their allocation to the BFSI space as we see more availability of money at a lower cost to help in a strong rebound in the sector.”

11:23 AM

Quote on RBI policy by Dr. Joseph Thomas, Head of Research - Emkay Wealth

“The RBI policy is on expected lines, as it keeps the base rate unchanged and the policy stance accommodative. The probability of RBI cutting rates in the near future remains quite low in view of the higher inflationary pressures. RBI views the current spike in prices a "transient hump", as price level may moderate in Q4. But, with a huge government borrowing program ahead, the RBI will continue with the liquidity support. It is actually the liquidity that has been helping both the debt and the equity markets. There is always a constituency of market participants who want rate cuts. They will be certainly disappointed. The reports which had come up last June that the rate cut cycle is coming to an end may gain more prominence now. In our view, it is not the rate cuts but the liquidity provision that matters today, when the market rates on short term bank and corporate papers have touched low single digits. The positioning of portfolios should continue on the same lines with an accent on the short and mid sector. The expected GDP contraction for FY 21 is placed at 9.50%, which is also quite close to most of the market estimates, with the Q4 number must likely turning positive number.”

11:20 AM

Quote on RBI policy by Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

"In the context of increased concerns on higher bond yields and higher government borrowings, RBI has given out a strong message that it will manage yields in an aggressive manner through larger OMOs which will also cover SDLs. This along with an expectation of moderation in inflation over the next few months is expected to keep 10 yr. gsec yields at sub 6% levels and also facilitates higher borrowings by the states in the near term. Further, significant steps have been taken to ensure liquidity in the financial markets and also the availability of debt to specific sectors with the “on tap TLTRO” of another Rs 1 Lakh Cr up to March 2021. Additionally, several regulatory measures such as tweaks on risk weights for home loans with higher equity contribution, an increase of exposure limits to individual retail and small business loans, and extension of co-origination models to cover all NBFCs and HFCs will help to incentivise higher lending to retail and SME sectors, thereby pushing the currently low credit growth.”

11:16 AM

Views on RBI policy by Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

"Though the policy rate remains unchanged, this is a very dovish policy announcement. The rationalisation of risk weightage of home finance companies is an innovative initiative that will bring home loan rates down. This will be a boost to the real estate sector & housing companies. Proposed OMOs for State Development Loans will boost liquidity for SDLs. This will be beneficial for funds starved states. The new MPC's first policy announcement is a fine example of being dovish without cutting rates. The positive response of the bond market with a sharp cut in yields is a reflection of the success of the policy."

11:09 AM

MADAN SABNAVIS | RBI's focus has been on liquidity provision in the right areas

Three important messages given by the Governor are positive for the market. The first is the assurance that the government borrowing programmes will be managed to ensure no liquidity issues arise. Second, open market operations (OMOs) are to be announced for state development loans (SDLs), which will provide more liquidity to the market and help to temper the yields that have increased sharply over G-Secs. Third, having on-tap TLTROs for Rs 1 trillion would be largely beneficial for various sectors. READ MORE