On April 5 morning, the Sensex and Nifty experienced a marginal decline following the Reserve Bank of India’s decision to maintain the repo rate at 6.5 percent for the seventh consecutive time, in line with expectations. Realty stocks emerged as top performers among rate-sensitive sectors, while autos witnessed a slip.
The Sensex was down by 65.01 points or 0.09 percent at 74,162.62, while the Nifty dipped by 20.70 points or 0.09 percent to 22,494.00. Market breadth favored gainers, with approximately 1,851 shares advancing, 1,292 declining, and 95 remaining unchanged.
Meanwhile, India’s 10-year bond yield remained stable, increasing by three basis points to 7.12 percent after the RBI retained its ‘withdrawal of accommodation’ stance.
In his policy announcement, RBI Governor Shaktikanta Das highlighted the challenge of achieving the last mile of disinflation globally. He noted that while services inflation persists in advanced economies, the outlook for rural and agricultural activities remains positive. The RBI projected consumer price index (CPI) inflation at 4.5 percent for FY25, assuming a normal monsoon.
As discussions surround surplus liquidity and the Reserve Bank of India’s (RBI) remarks on the improved liquidity scenario in March, market pundits anticipate a favorable response in rate-sensitive stocks.
Citing factors contributing to enhanced liquidity conditions such as increased government expenditure, RBI’s market interventions, and the return leg of US dollar and Indian Rupees sale via swap auctions, experts suggest that the RBI’s liquidity management endeavors could buoy investor sentiment. Sonam Srivastava, Founder and Fund Manager at Wright Research, highlights the potential for upward momentum in the stock market, particularly benefiting banking sectors, while also impacting sectors sensitive to interest rate fluctuations like real estate and infrastructure.
In terms of economic growth, RBI Governor Shaktikanta Das underscores the resilient global GDP growth, maintaining a steady real GDP growth projection of 7 percent for FY25, with Q1FY25 at 7.1 percent, Q2 at 6.9 percent, and both Q3 and Q4 at 7 percent.
Despite the optimistic growth outlook, equity strategists suggest the RBI may refrain from an immediate rate cut, especially in anticipation of actions by the US Federal Reserve. Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities, believes the RBI has ample room to maintain the repo rate steady, given the robust FY25 GDP growth forecast. Rakshit envisions a gradual rate cut cycle from Q3FY25 onwards, possibly accompanied by a shift in stance to neutral by end-Q2FY25 or in tandem with rate adjustments.
Echoing similar sentiments, Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Shares and Stock Brokers, predicts a cautious approach from the RBI before initiating any rate cut cycle.
Sources: moneycontrol.com
Disclaimer: The opinions and investment insights provided are intended solely for informational purposes and should not be construed as financial advice. Bystox.in strongly advises users to consult certified financial experts or professionals before making any investment decisions. We emphasize the importance of conducting thorough research and seeking personalized guidance tailored to individual financial goals and circumstances. Please be aware that investing involves inherent risks, and past performance is not indicative of future results. Bystox.in does not assume any responsibility or liability for the accuracy, completeness, or reliability of the information provided. Users are encouraged to exercise caution and diligence in their investment endeavors. Remember, your financial well-being is paramount, and seeking expert advice is highly recommended.
Comments are closed.