RBI's monetary policy spells more trouble for India Inc's earnings

In the absence of near-term government stimulus, markets may remain range-bound until Budget

Odds were in favour of a 25-basis-point reduction in repo rate. But when the Reserve Bank of India (RBI) decided against it on Thursday, the stock market seemed to have taken it in its stride: Without losing much ground, the BSE Sensex closed almost flat at 40,779. 

According to Pankaj Pandey, head of ICICI Securities, an increase in inflation as spelt out in the RBI policy had somewhat been priced in. What gives some hope, explains Prabhudas Lilladher Chief Portfolio Manager Ajay Bodke, is “the monetary policy committee’s willingness to reduce rates in future if conditions warrant a reduction”. 

However,