Latest news with #SanjayMalhotra.
Economic Times
7 days ago
- Business
- Economic Times
Rate-sensitive stocks fall up to 4% after RBI holds rates, maintains neutral policy stance
Rate-sensitive stocks, including banking, non-banking financial services, and realty, edged lower on Wednesday after the Reserve Bank of India (RBI) kept the benchmark repo rate steady at 5.5% and reaffirmed its 'neutral' policy stance, in line with expectations. The central bank also signaled continued resilience in growth and easing price pressures through revised inflation projections. ADVERTISEMENT The Bank Nifty fell 0.2% following the RBI's policy announcement, while the Nifty Realty index dropped 2.3%. Broader financials also traded weak, with the Nifty PSU Bank index and the Nifty Financial Services index down 0.2% each. The Nifty Financial Services Ex-Bank index underperformed, slipping nearly 1%. Among rate-sensitive sectors, real estate bore the brunt of the market reaction. Prestige Estates, DLF, and Godrej Properties fell between 2% and 4%. Banking and NBFC stocks also saw selling pressure, with IndusInd Bank, AU Small Finance Bank, and IDFC First Bank declining in the range of 1% to 2%. 'The MPC's unanimous decision to keep the repo rate unchanged at 5.5%, even while reducing the CPI inflation forecast to 3.1% for FY26 from 3.7% earlier, can be described as a dovish pause,' said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial added that the downward-trending inflation, supported by a good monsoon and Kharif sowing, will keep inflation well-anchored, enabling the MPC to go for another rate cut in this rate-cutting cycle.'The RBI Governor's view that 'we are waiting for the transmission of front-loaded rate cuts' is appropriate under the current circumstances. This policy of a dovish pause while maintaining a neutral stance is positive for the banking and other rate-sensitive sectors,' he said. ADVERTISEMENT 'Domestic growth is holding up and is evolving along the lines of our assessment, though some high-frequency indicators showed mixed signals in May and June,' said RBI Governor Sanjay Malhotra.'Over the medium term, the Indian economy holds bright prospects in the changing world order, drawing on its inherent strength, robust fundamentals, and comfortable buffers.' ADVERTISEMENT The central bank retained its real GDP growth forecast for FY26 at 6.5%, with quarterly estimates unchanged at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in inflation, the RBI revised its full-year CPI forecast to 3.1%, down from 3.7% previously. The Q2 FY26 estimate was sharply cut to 2.1% from 3.4%, while Q3 was lowered to 3.1% from 3.9%. The Q4 forecast remains at 4.4%, with Q1 FY27 inflation projected at 4.9%. ADVERTISEMENT 'Retail inflation is likely to see an uptick in the last quarter of FY2026,' Malhotra noted, though he added that 'core inflation is likely to remain steady around the 4% mark.'After slashing rates by 50 basis points in the previous meeting, the RBI's decision to pause while maintaining a neutral stance was broadly anticipated by the market. The central bank has now reduced the benchmark rate by a cumulative 100 basis points over the past three meetings, front-loading its easing measures for the current fiscal into the policy, many analysts had predicted a 'dovish pause', expecting the RBI to lower its CPI projections for the year. With growth remaining steady and inflationary pressures cooling, most economists now expect the central bank to hold its stance steady in the near term. ADVERTISEMENT Also read | RBI MPC keeps repo rate unchanged at 5.5% amid Trump tariff threats; reveals GDP, inflation targets for Q1 FY27 (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
India Today
7 days ago
- Business
- India Today
RBI keeps key lending rate steady at 5.5% amid global trade uncertainty
The Reserve Bank of India (RBI) on Wednesday decided to keep the key repo rate unchanged at 5.5%, as the Monetary Policy Committee (MPC) concluded its three-day meeting led by Governor Sanjay Malhotra."The Monetary Policy Committee, MPC, met on the 4th, 5th and 6th of August to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the Liquidity Adjustment Facility unchanged at 5.5%," said RBI Governor Sanjay further said that the Standing Deposit Facility rate will remain at 5.25%, and the Marginal Standing Facility rate and the Bank Rate will continue at 5.75%. "The MPC also decided to continue with a neutral stance," he CONCERNS STILL LINGERGovernor Malhotra explained the reason behind keeping rates unchanged, pointing to the movement in inflation numbers over recent months."The MPC noted that while headline inflation is much lower than projected earlier, it is mainly due to volatile food prices, especially in vegetables. Core inflation, on the other hand, has remained steady around the 4% mark as anticipated. Inflation is projected to go up from the last quarter of this financial year," he RBI has been closely watching inflation trends, particularly food prices, which have been unpredictable in recent months. While the central bank is relieved by the overall cooling in inflation, there are still concerns that it might rise again toward the end of the STABLE, BUT RISKS REMAINOn the economic growth front, the Governor said that India's growth remains strong but not quite at the level the central bank had earlier hoped for."Growth is robust and as our earlier projections go, of course, below our expectations. The uncertainties of tariffs are still evolving. Monetary policy transmission is continuing," said explained that the full impact of the 100 basis points cut in the repo rate since February is still being felt. 'The impact of the 100 basis points rate cut since February 2025 on the broader economy is still unfolding,' he FOR EARLIER RATE CUTS TO WORKGiven that the RBI has already cut rates by 100 basis points over three policy meetings this year, Malhotra said the central bank will now wait to see how those changes impact borrowing costs and economic activity.'On balance, therefore, the current macroeconomic conditions, outlook and the uncertainties call for continuation of the policy repo rate of 5.5% and wait for further transmission of the front-loaded rate cut to the credit markets and to the broader economy. Accordingly, the MPC unanimously voted to keep the repo rate unchanged,' the Governor STANCE TO CONTINUELooking ahead, the RBI said it would closely track incoming data before making any further changes to its policy approach.'The MPC further resolved to maintain a close vigil on the incoming data and the evolving domestic growth-inflation dynamics to chart out the appropriate monetary policy path. Accordingly, all members decided to continue with a neutral stance," Malhotra Bhardwaj, Chief Economist, Kotak Mahindra Bank said that the MPC's decision to keep rates unchanged comes in the wake of global uncertainties, even as inflation remains benign and downside risks to growth persists."With inflation likely to trend higher post the near term favourable trends, the bar for rate cuts ahead is set very high. We can see some room for the last leg of easing only if growth momentum slows significantly," she added.- Ends advertisement
