RBI Monetary Policy: What market experts are saying

#markets, #monetary policy committee, #RBI, #RBI monetary policy, #RBI policy, key lending repo rate at 4 percent , Union Budget

RBI Monetary Policy: Impact on markets

The Monetary Policy Committee on December 8 retained the key lending repo rate at 4 percent for the ninth consecutive session, in line with what the market was expecting amid growing uncertainty because of the Omicron virus.

The rate-setting panel of the Reserve Bank of India also maintained its accommodative stance until there was sustained economic recovery.

After the announcement by Governor Shaktikanta Das, markets remained upbeat and hit the day’s high, led by financials, information technology and real estate sectors.

Let’s check out what market experts feel about the outcome of the Monetary Policy meeting.

Nikhil Gupta, Chief Economist, Motilal Oswal Financial Services

Overall, there were no surprises in the policy today and it was broadly a non-event. Going forward, we fear that the real GDP growth could be lower than the RBI projections, with inflation falling broadly in line. Along with the rising threat from the Omicron variant, there is a possibility that a hike in reverse repo could be postponed to April 2022.

However, if growth turns out to be better than our expectations (or in line with/better than RBI projections) and the Omicron threat doesn’t materialise, a 15-bps hike in the reverse repo rate in February cannot be ruled out. The Union Budget will also play an important role in the next MPC meet.

Also read: RBI Monetary Policy: Economy not yet strong enough for self-sustaining, needs policy support, says Shaktikanta Das

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services

The MPC has again taken a decision in favour of growth by continuing with accommodative monetary stance and status quo in rates. More importantly, the guidance is also dovish with no indications of rate hikes in the immediate future. The CPI inflation projection for Q3 and Q4 of FY22 at 5.1 percent and 5.7 percent, respectively, is an indication of the RBI’s belief that higher food inflation is temporary since it is caused by crop damages during unseasonal rains. Also, the central bank believes that lower crude prices and reduced petrol and diesel prices will “mitigate the cost push build-up”. Thus, a pro-growth policy and very positive from the market perspective.

Also read: RBI Monetary Policy: CPI inflation projected at 5.3% in 2021-22, says Shaktikanta Das

Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank

The MPC expectedly maintained status quo on the policy rates and stance. The rhetoric, too, has remained focused on maintaining durable growth as long as inflation remains well in check. We continue to expect the RBI to fine tune the surplus liquidity to manage rates and consequently provide guidance on the operating target rate shifting closer to the repo rate. We retain our base case of reverse repo rate hike in February.

Abhay Agarwal, Founder, Piper Serica

The RBI has maintained its policy of ‘first do no harm’, kept its stance accommodative, and kept its liquidity management options open. Clearly, the RBI’s focus is on making sure that the nascent post-COVID recovery is resilient and not just short-lived. So, it is quite sensibly pursuing flexible inflation targeting to ensure a ‘soft-landing’ rather than a hard one.

Overall, we expect that stock markets will be relieved that there are no negative surprises. The recent fragile recovery in consumer discretionary space like real estate and automobiles is expected to continue as there is greater certainty on borrowing costs and EMIs that drive consumer decisions.

The short-term funds are expected to yield slightly higher returns now. The fixed-income investors should continue to stay in the shorter duration funds as the long-term funds may see a price erosion in case of an increase in the long-term G-Sec rates.

Also read: RBI Monetary Policy: UPI cap on IPO, gilt investments raised to Rs 5 lakh

Raghvendra Nath, MD, Ladderup Wealth Management

On the expected lines, the RBI has continued with its accommodative stance which, we believe, is the right decision. Easy monetary policy and low interest rates shall play a crucial role in reviving demand and kick-start the capex cycle. Moreover, inflation is not a big worry right now as most of the recent spike in inflation was caused due to higher commodity prices that are driven by international factors.

The fear of coronavirus derailing the economy once again is real and highly probable. Such times require high degree of monetary and fiscal support, and the RBI is rightly dealing with it through its easy policy.

Sonam Srivastava, Founder, Wright Research

The markets will cheer the policy as it is accommodating to growth, and the country’s inflation expectation analysis remains positive. This is in line with the expectations of the markets and thus, positive sentiment is likely to bolster growth in sectors such as banking, real estate, export-import and manufacturing.

The stock prices of companies in these domains are likely to see a rise in price. It is indeed a great time for investors to be invested in the market.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

News Related


Brussels opens WTO case against China over Lithuanian conflict

The European Union wants to pressure China through a procedure at the World Trade Organization (WTO) to lift trade restrictions against Lithuania. European Trade Commissioner Valdis Dombrovskis announced on Thursday ... Read more »

Worker at Amy's Kitchen files official complaint over working conditions

The complaint said workers don’t have access to clean drinking water during their shifts and are at risk of developing repetitive motion injuries, among other allegations. Read more »

Raid at broadcaster for embezzlement of wages for foreign workers

Photo: ANP The Labor Inspectorate has raided an employment agency in ‘s-Heerenberg that is suspected of embezzlement and forgery. According to NRC, it concerns the company Reyhan, something the inspection ... Read more »

Explainer: What ails the Bad Bank proposal unveiled in the last budget?

Representative Image The Bad Bank was a big-ticket item in the last Union Budget. In this Budget too, the banking industry will keenly follow the finance minister’s speech for updates ... Read more »

Arvind Ltd Q3 net profit jumps to Rs 94 crore

Leading textile manufacturer Arvind Ltd on Thursday reported an over four-fold increase in consolidated net profit at Rs 94.34 crore for the third quarter ended December 2021, led by volume ... Read more »

NTPC invites bids to set up 3GW energy storage facility in India

State-run power giant NTPC’s arm, NTPC Renewable Energy Ltd (NREL), has invited bids for selection of developers for inter-state transmission system (ISTS)-connected energy storage facility of 3,000 MW capacity at ... Read more »

Budget should focus on bridging widened inequality in economy, creating jobs: D Subbarao

Former RBI Governor D Subbarao (Image: Reuters) The upcoming Budget should focus on creating jobs and bridging the widened inequality in the economy besides accelerating growth, former RBI Governor D ... Read more »

M&M records almost 1 lakh bookings of XUV700, bills 14,000 units

Aside from just the engines, the Mahindra XUV700 will come loaded up with segment leading features. [Image: Twitter/@anandmahindra] Mahindra & Mahindra Ltd on Thursday said it has clocked almost one ... Read more »

Paytm Money launches 'Pops' messenger to provide user-specific info on stocks, portfolio and market

Representative image Investment advisory platform Paytm Money, a wholly-owned subsidiary of One97 Communications Ltd, on January 27 launched Pops, an intelligent messenger service to provide user-specific information on their portfolios, stocks ... Read more »

Lunar New Year spending seen at 11-year low - survey

A shopkeeper arranges Lunar New Year-themed decorations se she waits for customers in the southern Thai province of Narathiwat on Thursday. (AFP photo) Consumer spending over the Lunar New Year ... Read more »

Budget 2022 | Allocate more to reduce turbulence in aviation sector

The aviation industry has been in turbulence since the onset of COVID-19, grappling from a confluence of factors starting from pandemic-related travel restrictions, swing in demand conditions from the leisure ... Read more »

Deutsche Bank sees biggest annual profit in a decade

FRANKFURT, Germany — Deutsche Bank reaped its best annual profit in 10 years and said it had put most of its wrenching, years-long restructuring behind it. The bank underlined its ... Read more »

WeTransfer cancel IPO, citing volatile market conditions

Euronext Amsterdam. Photo: DutchNews.nl File sharing service WeTransfer has cancelled its IPO on the Amsterdam stock exchange, just one day before it was due to take place. Parent company WeRock ... Read more »

European Union opens case against China at WTO over Lithuania

Photo: ANP The European Union filed a case against China at the World Trade Organization WTO on Thursday in support of Lithuania. China has been blocking exports from the EU ... Read more »

Exchange Fund's gains slump 28 per cent to US$21.9 billion in 2021 as Hong Kong market rout hits investment returns

Hong Kong’s Exchange Fund, the war chest used to defend the local currency, saw its earnings slump 28 per cent in 2021, as its performance was hit by a slump ... Read more »

Can Fin Homes Standalone December 2021 Net Sales at Rs 508.27 crore, up 1.1% Y-o-Y

Reported Standalone quarterly numbers for Can Fin Homes are: Net Sales at Rs 508.27 crore in December 2021 up 1.1% from Rs. 502.72 crore in December 2020. Quarterly Net Profit ... Read more »

Vaishali Pharma Standalone December 2021 Net Sales at Rs 22.28 crore, up 4.63% Y-o-Y

Reported Standalone quarterly numbers for Vaishali Pharma are: Net Sales at Rs 22.28 crore in December 2021 up 4.63% from Rs. 21.30 crore in December 2020. Quarterly Net Profit at ... Read more »

Shree Ram Proti Standalone December 2021 Net Sales at Rs 69.79 crore, up 32.86% Y-o-Y

Reported Standalone quarterly numbers for Shree Ram Protiens Limited are: Net Sales at Rs 69.79 crore in December 2021 up 32.86% from Rs. 52.53 crore in December 2020. Quarterly Net ... Read more »

USFDA pulls up Aurobindo Pharma for manufacturing lapses at API plant

The US Food and Drug Administration (USFDA) has issued a warning letter to Aurobindo Pharma for violating current good manufacturing practice norms at its Telangana-based plant. In a letter to ... Read more »

Ranveer Singh, Jacqueline Fernandez breach ASCI influencer advertising guidelines

The Advertising Standards Council of India (ASCI) on January 27 launched a report on influencers who have breached the influencer advertising guidelines that were introduced on May 27 last year. The guidelines had come ... Read more »

Rane Brake Standalone December 2021 Net Sales at Rs 133.80 crore, up 0.96% Y-o-Y

Reported Standalone quarterly numbers for Rane Brake Linings are: Net Sales at Rs 133.80 crore in December 2021 up 0.96% from Rs. 132.53 crore in December 2020. Quarterly Net Profit ... Read more »

D. P. Abhushan Consolidated December 2021 Net Sales at Rs 668.11 crore, up 61.27% Y-o-Y

Reported Consolidated quarterly numbers for D. P. Abhushan are: Net Sales at Rs 668.11 crore in December 2021 up 61.27% from Rs. 414.28 crore in December 2020. Quarterly Net Profit ... Read more »

Sukhjit Starch Consolidated December 2021 Net Sales at Rs 318.65 crore, up 78.69% Y-o-Y

Reported Consolidated quarterly numbers for Sukhjit Starch and Chemicals are: Net Sales at Rs 318.65 crore in December 2021 up 78.69% from Rs. 178.33 crore in December 2020. Quarterly Net ... Read more »

Sukhjit Starch Standalone December 2021 Net Sales at Rs 315.03 crore, up 76.7% Y-o-Y

Reported Standalone quarterly numbers for Sukhjit Starch and Chemicals are: Net Sales at Rs 315.03 crore in December 2021 up 76.7% from Rs. 178.29 crore in December 2020. Quarterly Net ... Read more »

D. P. Abhushan Standalone December 2021 Net Sales at Rs 668.11 crore, up 61.27% Y-o-Y

Reported Standalone quarterly numbers for D. P. Abhushan are: Net Sales at Rs 668.11 crore in December 2021 up 61.27% from Rs. 414.28 crore in December 2020. Quarterly Net Profit ... Read more »

Regular market approval granted for Covishield, Covaxin for use in adult population

Representative image India’s drug regulator on Thursday granted regular market approval for COVID-19 vaccines Covishield and Covaxin for use in the adult population subject to certain conditions, official sources said. ... Read more »

Victoria's Secret sold stake in China for $45 million, announces partnership with Regina Miracle International

Photo by: Victoria’s Secret/YouTube Victoria's Secret announced earlier this week that it would be selling a 49% stake in its business in China. The American lingerie, clothing, and beauty retailer ... Read more »

WeTransfer cancels IPO due to market turmoil

A day before WeTransfer was to be officially listed in Amsterdam, the site where large files can be shared decided to cancel the IPO. That has the parent company WeRock ... Read more »

Uttarakhand CM Pushkar Singh Dhami files nominations from Khatima

In his Independence Day speech, Uttarakhand CM Pushkar Singh Dhami had announced that the state will form a committee to bring and implement an effective law on population control in ... Read more »

Dubai regulator issues massive fine on Abraaj founder

The Associated PressFILE – Arif Naqvi, the founder and CEO of the Abraaj Group, speaks at the Bloomberg Global Business Forum, Sept. 20, 2017, in New York. A regulatory body ... Read more »

Australia's Woodside Petroleum pulls out of Myanmar projects

BANGKOK — Australia’s Woodside Petroleum is withdrawing from projects in strife-torn Myanmar, following a similar decision last week by Total and Chevron. Woodside put all its Myanmar activities under review ... Read more »

ED arrests Karvy Group Chairman C Parthasarathy in Rs 2,000-crore security scam

Representative image The Enforcement Directorate (ED), on January 27, arrested Chairman and MD of Karvy Group, Comandur Parthasarathy along with CFO, G Hari Krishna during the ongoing investigation in the ... Read more »

INOX CEO says January footfalls pushed back by a month or two; restrictions a cause for concern

Shutdowns in some states, restricted capacity in most markets and deferred releases are the concerns the cinema exhibition sector is dealing with because of rising COVID-19 cases due to the Omicron variant. ... Read more »

WeTransfer cancels IPO due to ‘volatile market'

WeTransfer is not going to the Amsterdam exchange after all. The company announced this in a press release on Thursday. WeRock NV, the owner of the tech company, thinks the ... Read more »

Samsung records record sales and invests heavily in chip production

Photo: ANP Technology group Samsung Electronics posted record sales last quarter thanks to growing demand for its smartphones, displays and memory products. The South Korean group also invested heavily in ... Read more »

Future Group to sell 25% in general insurance JV to Generali for Rs 1,253 crore; to exit insurance business

Representative image Debt-ridden Future Group will exit from the insurance business in a time-bound manner and plans to sell its 25 per cent equity in Future Generali India Insurance Company ... Read more »

Airtel Payments Bank customers' deposit surges 75% to Rs 1,000 crore in 2021

Money deposited with Airtel Payments Bank surged 75 percent to Rs 1,000 crore in 2021 as compared to the previous year, a top company official said. The payments bank had ... Read more »

WeTransfer cancels IPO

WeTransfer has spent more than a year working on the stock exchange plans with its banks, with it reportedly initially envisioning a market cap of more than $1 billion for ... Read more »

Tech company WeTransfer cancels IPO due to market turmoil

Photo: ANP Tech company WeTransfer is canceling its IPO in Amsterdam this Friday due to the unsettled market conditions on the stock exchanges. Share prices have fallen sharply recently due ... Read more »

Sachin Bansal-backed Navi Mutual Fund's US Stock Market Fund to be launched next week

Sachin Bansal Flipkart co-founder Sachin Bansal-backed Navi Mutual Fund (MF) will be launching its US Total Stock Market Fund of Fund next week, on February 4. The fund will give Indian ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic