CRR hike, higher inflation not to impact market: Experts

The cash reserve ratio (CRR) hike and a higher inflation forecast by the Reserve Bank of India (RBI) will not have much impact on the stock market as both have already been factored in by market participants, experts said.

"The 0.75 per cent hike in CRR will not impact the market much though the industry anticipated at most a 0.50 per cent hike," Angel Broking's Managing Director Dinesh Thakkar said.

An interest rate hike was also not imminent as "banks have a lot of money and there is sufficient liquidity available in the system", he said.

Last Friday, the RBI hiked CRR by 0.75 per cent to 5.75 per cent while pegging inflation at 8.5 per cent by end-March.

Agreeing with this view, Edelweiss' Institutional Equities Co-Head Vikas Khemani, said that lowering of the credit growth forecast would also not impact the market.

"Capacity utilisation is picking up along with industrial confidence. By the next quarter, we can expect a better credit growth forecast," he said.

The forecasted credit growth is anyway as per the market expectation, Thakkar said.

"Currently, credit growth is sluggish at 11-12 per cent. The market will be happy if it reaches 16-17 per cent as it means a GDP growth at 7.5 per cent levels. So it should not impact the market," he said.