 "Rate-sensitive stocks trade firm after RBI keeps repo rate unchanged")
Shares of interest rate sensitive sectors, mainly financials and automobiles, were trading firm on the National Stock Exchange (NSE) on Friday after the Monetary Policy Committee (MPC) of the Reserve Bank of India decided to keep repo rate unchanged at 4 per cent while maintaining the 'accommodative' stance.
The reverse repo rate stays at 3.35 per cent. The RBI last changed policy rate on May 22. It maintained the status quo on the benchmark lending rates in view of persistently high inflation and a lower-than-expected contraction of the economy.
At 10:40 am, Nifty Bank, Nifty Auto, and Nifty Financial Services indices were up between 1 per cent and 1.5 per cent, as compared to 0.8 per cent rise in the benchmark Nifty50 index. The Nifty Realty index was up 0.63 per cent on the NSE. State Bank of India (SBI), RBL Bank, ICICI Bank, Power Finance Corporation and Bajaj Finance from the financials were up in the range of 2 per cent to 3 per cent.
The RBI expects the Indian economy to contract 7.5 per cent for the current financial year 2020-21 (FY21). Q3FY21 GDP is seen at +0.1 per cent while Q4FY21 GDP is seen at +0.7 per cent, it said.
Turning to the growth outlook, the recovery in rural demand is expected to strengthen further, while urban demand is also gaining momentum as unlocking spurs activity and employment, especially of labour displaced by COVID-19. Fiscal stimulus is increasingly moving beyond being supportive of consumption and liquidity to supporting growth-generating investment. On the other hand, private investment is still slack and capacity utilisation has not fully recovered, RBI Governor Shaktikanta Das said in Monetary Policy Statement.
“RBI policy was on expected lines. They have prioritised growth over inflation. This is an acknowledgment that inflation drivers seem to be more supply side led. An accommodative liquidity stance will ensure access to liquidity will not be a challenge and the ongoing recovery continues to gather steam. This will help push through government borrowings in a year where the revenues are under pressure. Guidance is better than earlier on growth and flows. Positive for markets,” said Ashish Shanker, Deputy MD and Head of Investment, Motilal Oswal Private Wealth Management.
The reverse repo rate stays at 3.35 per cent. The RBI last changed policy rate on May 22. It maintained the status quo on the benchmark lending rates in view of persistently high inflation and a lower-than-expected contraction of the economy.
At 10:40 am, Nifty Bank, Nifty Auto, and Nifty Financial Services indices were up between 1 per cent and 1.5 per cent, as compared to 0.8 per cent rise in the benchmark Nifty50 index. The Nifty Realty index was up 0.63 per cent on the NSE. State Bank of India (SBI), RBL Bank, ICICI Bank, Power Finance Corporation and Bajaj Finance from the financials were up in the range of 2 per cent to 3 per cent.
The RBI expects the Indian economy to contract 7.5 per cent for the current financial year 2020-21 (FY21). Q3FY21 GDP is seen at +0.1 per cent while Q4FY21 GDP is seen at +0.7 per cent, it said.
Turning to the growth outlook, the recovery in rural demand is expected to strengthen further, while urban demand is also gaining momentum as unlocking spurs activity and employment, especially of labour displaced by COVID-19. Fiscal stimulus is increasingly moving beyond being supportive of consumption and liquidity to supporting growth-generating investment. On the other hand, private investment is still slack and capacity utilisation has not fully recovered, RBI Governor Shaktikanta Das said in Monetary Policy Statement.
“RBI policy was on expected lines. They have prioritised growth over inflation. This is an acknowledgment that inflation drivers seem to be more supply side led. An accommodative liquidity stance will ensure access to liquidity will not be a challenge and the ongoing recovery continues to gather steam. This will help push through government borrowings in a year where the revenues are under pressure. Guidance is better than earlier on growth and flows. Positive for markets,” said Ashish Shanker, Deputy MD and Head of Investment, Motilal Oswal Private Wealth Management.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%