RBI rate cut fails to cheer markets; Nifty ends below 10,100 mark

All that happened in Wednesday's trade

3:16 PM

Madan Sabnavis, Chief Economist, CARE ratings

 

The decision to lower rates was expected even as the market has made it a habit to always buffer a rate cut every time a policy is announced. Prima facie, it appeared that with CPI inflation going below 2% there was strong reason to lower rates as the target which has been set is 4% with a band of 2% on either side. With the number crashing through the lower limit, a clamour for rate cuts naturally built up. But if one goes back to the earlier policy statement from the RBI, there were some issues highlighted which are still not addressed today. CLICK HERE FOR FULL ANALYSIS

3:11 PM

Viral Acharya: Working on next steps for resolution of stressed assets in banks

2:59 PM

COMMENT: Shishir Baijal, Chairman & Managing Director, Knight Frank India

 

The policy rate cut of 25 bps by the Reserve Bank of India’s monetary policy committee is on the expected lines. While it is a welcome move we were looking forward to a much more aggressive rate cut. 

 

Considering the battery of new reforms in force, a good monsoon in progress, benign inflation numbers, favourable global environment and the overall uptick in industry sentiments a healthier lending rate could have provided the much needed thrust to fuel India’s growth story. 

 

But we are happy to see that the central bank has adopted a monetary policy that propels growth. A growing economy would signal healthy consumption across all genres of the Indian real estate

2:59 PM

Viral Acharya: Currency in circulation is showing early signs of normalisation

2:58 PM

Viral Acharya: There remains much surplus liquidity in the system 

2:57 PM

COMMENT ON RBI POLICY: EPIC RESEARCH

 

This was mostly discounted in prices where we have seen the recent run up in broader indices as well. We have seen a positive build up in interest rate sensitive sectors like automobile, banking, Reality and NBFCs. So, liquidity was already present for a while and with this boost we may see further momentum.

 

We expect Reality stocks to gain some momentum, while private banks will do well due to their better return on deposits as compared to PSU banks. We maintain our 'buy on dips strategy' with next the next targets around 10,400 - 10,450 on the Nifty. Bank Nifty may rally towards 25,800 levels, while base is seen at 24,800.

 

2:56 PM

Viral Acharya: Marginal cost rate loan experience not satisfactory

2:55 PM

Addressing twin balance-sheet issue is top priority, says RBI deputy governor Viral Acharya

2:54 PM

Benchmark indices extends fall with Sensex falling over 100 points and Nifty50 down 36 points.

2:50 PM

PRESSURE ON HEADLINE INFLATION

 

High frequency indicators suggest that price pressures are building up in vegetables and animal proteins in the near months. There are, however, some moderating forces at work. First, the second successive normal monsoon coupled with effective supply management measures may keep food inflation under check. Second, if the general moderation of price increases in CPI excluding food and fuel continues, it will contain upside pressures on headline inflation: RBI

2:48 PM

HRA IMPACT ON INFLATION

 

If States choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months -- RBI

2:47 PM

In broader markets, BSE Midcap fell 0.33% while BSE Smallcap was little changed post the outcome

2:46 PM

RBI on state of economy

 

There is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all. This hinges on speedier clearance of projects by the States. On their part, the Government and the Reserve Bank are working in close coordination to resolve large stressed corporate borrowers and recapitalise public sector banks within the fiscal deficit target. These efforts should help restart credit flows to the productive sectors as demand revives. 

2:46 PM

MPC VOTE PATTERN

 

Chetan Ghate, Pami Dua, Viral Acharya and Urjit Patel were in favour of the monetary policy decision, while Ravindra Dholakia voted for a policy rate reduction of 50 basis points and Michael Debabrata Patra voted for status quo. 

2:45 PM

Other rate sensitive stocks - Nifty Auto and Nifty Realty were trading flat but in red post the policy outcome