CRISIL expects car, home sales, cement volumes to dip after RBI steps

MUMBAI (Reuters) - The Reserve Bank of India's measures to tighten liquidity over the last two weeks will hit car and home sales, while also reducing volume growth for steel and cement companies, ratings agency CRISIL said in a note on Thursday.

The RBI lifted short-term interest rates and made it harder for lenders to access funds, as it continued its defence of the rupee, which slumped to a record low of 61.21 to the dollar on July 8.

CRISIL expects car sales to dip 2-3 percent, new home sales by 400 basis points (bps) and volume growth for steel and cement to fall about 100 bps due to the measures.

The agency also expects refinancing to be a challenge for companies due to tighter cash conditions, which could prompt more rating downgrades than upgrades in the near term.

"CRISIL expects credit quality pressures on corporates to continue, given the difficult environment. The pressure will be greater on firms with higher leverage and longer working capital cycles," the note said.

It also lowered India's growth forecast by 50 basis points to 5.5 percent for the financial year ending March 2014.

(Reporting by Neha Dasgupta; Editing by Prateek Chatterjee)