Sensex slips 215pts amid volatility post repo rate hike; ITC, RIL weigh
The RBI today raised the repo rate to 4.9 per cent, up from 4.4 per cent. The Central Bank also raised consumer price (CPI) or retail inflation forecast for FY23 to 6.7 per cent from 5.7 per cent.
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Expert take post RBI policy: Expect RBI to continue hawkish stance till FY23-end
The June policy was a continuation of the off-cycle policy with the focus remaining squarely on inflation. The RBI’s decision of hiking repo rate by 50 bps as well as increasing inflation estimate by 100 bps were in line with market expectations. The tone of the policy continues to be hawkish and we expect the RBI to continue hiking repo rate to ensure a neutral to marginally positive real policy rate. We expect 35 bps repo rate hike in the August policy to 5.25% and repo rate at 5.75% by end-FY2023. Along with pushing the repo rate to above the pre-pandemic level, a 35 bps hike would also signal a gradual normalization in the policy actions while being adequately hawkish. We also expect another 50 bps hike in CRR to 5% by end-FY2023 to move the liquidity conditions towards the pre-pandemic levels.
Views expressed by Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities
Realty expert on RBI policy: 50 bps repo rate increase to pinch homebuyers
From a real estate perspective, home loans are set to get costlier.
Banks have already raised the interest rate on home loan by 30-40bps since the earlier repo rate hike by the RBI in May and now with the repo rate cumulatively higher by 90 basis point there will be further increase in interest rate for homebuyers.
Rising interest rate along with elevated property construction cost and product price pressures could adversely impact the real estate buyer’s sentiment.
We hope that economic recovery and household income growth will serve as a cushion for sustaining consumer demand in the face of this rate hike.
Further, monetary policy tightening by central banks globally and any resolution on the prolonged Russia – Ukraine war will bring price stability.
Views by Shishir Baijal, Chairman & Managing Director, Knight Frank India.
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Expert take post RBI policy: Rate hike of 50 bps in-line with street estimates
With CPI forecasts at 6.7% from 5.7%, RBIs rate hike of 50bps came in line with market expectations and was taken into account by the market in the previous trading sessions. In an attempt to curb inflation, the expectations of this rate hike had been factored in the form of increase in bond yields, which might result in expensive borrowing for corporates. However, a consequent correction expected in raw material prices as a result of this announcement might provide a stable long term growth plan for the overall economy.
Views expressed by Mr. Shivam Bajaj, Founder & CEO at Avener Capital
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Expert take post RBI policy: Inflation revision to 6.7% in FY23 will hurt consumer pockets
The inflation has been above the RBI's target range of 2-6% since the beginning of the year. With the ongoing Ukraine war and the COVID issues in China, the supply chain disruptions continue to affect global inflation. So, a rate hike of 30-50bps was expected by the RBI. The RBI has revised the inflation for FY23 to 6.7%, so inflation will continue to hurt the consumer pockets and company bottom-line for the coming quarters. We may see the food inflation coming down if the expectation of a normal monsoon this season turns out to be true. CRR was expected to be raised, but it seems RBI has decided to maintain the liquidity with banks for now.
Views expressed by Mr. Raghvendra Nath, Managing Director – Ladderup Wealth Management Private
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Expert take post RBI policy: 50 bps rate hike a clear message to tame inflation
RBI's projections of GDP growth rate of 7.2% and inflation of 6.7% for FY23 reflect a realistic monetary policy. The higher inflation projection indicates that the central bank recognises the seriousness of inflation and the 50 bp repo rate hike is a message that they are determined to anchor inflation expectations. The Governor's remark that " the economy remains resilient and recovery has gathered momentum" is bullish from the market perspective. The bond market's positive response with bond yields rising stems from the absence of CRR hike.
Views expressed by Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
Expert take post RBI policy: Rate hike can make home buyers apprehensive
The current round of hikes could make the buyers apprehensive and they might as well adopt a wait and watch attitude. But on a positive note, the continued wage and job growth in varied sectors will provide a cushion in the short term for the purchasing decisions. The all-time low home loan interest regime in the recent past had boosted the housing demand and also enabled a robust recovery in the real estate sector post the pandemic. Today, people feel the inherent need to make progressive lifestyle changes to lead a more balanced and healthy life. We are hopeful that an improved homebuyer attitude and preference for owning a house will support the housing market and we expect that consumer demand will remain buoyant in the near term. The rate hike won’t have significant impact as home loan interest rates have already gone down substantially in the recent past and buying decisions may not be altered by these marginal changes. The outlook for India Inc looks positive with higher affordability and disposable income in the hands of new-age investors.
Views expressed by Mr. Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company
Expert take post RBI policy: Mr. Ramani Sastri - Chairman & MD, Sterling Developers
From a real estate perspective, this hike in the policy rate comes as a hurdle as home loan rates will increase, putting a dent on the homebuyer's sentiments. Any increase in the interest rate will further impact the costs of doing business and hence the move will hurt business sentiment too as the economy is still recovering from the pandemic.
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First Published: Jun 08 2022 | 8:02 AM IST
