Shares of interest-rate sensitive sectors such as banking, automobiles and realty are trading lower after the Reserve Bank of India (RBI) has kept the repo rate, cash-reserve ratio unchanged.
Punjab National Bank, Canara Bank, IndusInd Bank from banking, Bajaj Auto, Hero MotoCorp and Tata Motors from auto and DLF, HDIL and Unitech from realty sector are down 1-4% on the Bombay Stock Exchange (BSE). The BSE Realty index was the largest loser falling 2%, while auto and banking index are down 1% each at 1150 hours.
“It has been decided to keep the repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25%. The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 6.25%,” RBI said in a statement.
The Central Bank said that the current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance.
However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we have to forfeit some monetary policy discretion to address external sector concerns, it added.
Punjab National Bank, Canara Bank, IndusInd Bank from banking, Bajaj Auto, Hero MotoCorp and Tata Motors from auto and DLF, HDIL and Unitech from realty sector are down 1-4% on the Bombay Stock Exchange (BSE). The BSE Realty index was the largest loser falling 2%, while auto and banking index are down 1% each at 1150 hours.
“It has been decided to keep the repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25%. The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 6.25%,” RBI said in a statement.
The Central Bank said that the current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance.
However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we have to forfeit some monetary policy discretion to address external sector concerns, it added.
You’ve reached your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
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%