Market Experts quote on RBI MPC | Stock Market | Real Estate | Industry
RBI governor Shaktikanta Das-headed Monetary Policy Committee (MPC), started out its deliberations on Monday. It met for 3 days from June 6. The MPC unanimously voted to increase the policy repo rate by 50 basis points to 4.90%.
Lets see what the market experts have to say on Repo rate hike announcement:
Dr. Ravi Singh, vice President and head of Research, Share india
In line with the expectation, RBI has increased the repo rate by 50 basis points and is already discounted by the market. The Ukraine Russia war has led to an increase in inflation globally beyond tolerance level and is effecting the economic growth. However, most of the industries are already facing headwinds due to steep increase in raw materials cost and fuel prices, and a hike in the rates will further increase the burden. The Fed is also increasing the rate so there is major possibility that apart from equity market, other markets like debt market and bond market may see some outflow anytime soon. Auto, Real estate, Banking and infrastructure stocks would be worst hit by the rate hike as loan financing is a major part of these sectors. FMCG, Insurance, Energy, Power and Utility sectors provides a cushion against rising interest rates
Arun Kumar, Head of Research, FundsIndia
The rate hike of 50 bps was in line with market expectations. With this hike, RBI is closer to bringing the repo rate back to the pre-covid levels of 5.15%. The RBI has clearly acknowledged the inflation risks primarily driven by food and commodity prices and revised its FY23 inflation projection upwards by 100 bps to 6.7% (from 5.7% in the April meeting). The 2% to 6% inflation band is now expected to be breached for three consecutive quarters. Given this context, RBI is expected to front-load its rate hike actions. However, the growth forecast for FY23 remains unchanged at 7.2%. Overall, the focus at the current juncture is clearly on controlling inflation and the government has also joined the RBI in an attempt to contain inflationary pressures in the economy. As bond yields have increased over the last few months (factoring in for a large part of future rate hikes), debt fund yields are becoming more attractive (especially in the 3-5Y duration segments).”
Atul Goel, MD, Goel Ganga Group
RBI’s recent step to increase the repo rate by 50 basis points has been on the expected lines. To curb inflation, the regulatory bodies in India were required to control liquidity circulation in the economy. For a few months, the inflation rate has been above 6%, which is beyond the RBI’s safe zone. If not controlled, the inflationary pressure could destabilize an otherwise bullish Indian economy. Although the recent step will increase the home loan rates, an unstable economy is not conducive to the overall health of the real estate industry. For the industry to operate optimally, it is important that the economy continues to grow in a stable, inclusive, and steady fashion.
Amit Gupta, MD, SAG Infotech
In our view the recent proposal of linking Credit cars with UPI is a very good way to boost economy means that every person who would want to do a transactions even with no disposable income at the moment can purchase certain item of his desire, be it small grocery or everyday essentials, making a much convenient life for citizens. Initially rupay credit cards will offer a insight on how the linking will perform and talking about the charges of credit card after 45 days, it may be same as earlier albeit increasing the volume of calculations on the banks side.
Manoj Dalmia, founder and director Proficient equities Private limited
RBI has raised the repo rate by 40bps to 4.9% , the inflation projection for this fiscal is 6.7% and will remain above the tolerance band of 2-6% for three quarters in this fiscal, RBI is still expects the economy to grow at a rate of 7.2% .
The SDF and MSF have been increased to 4.65% and 5.15% respectively, RBI is expected to reduce liquidity, reinforcing its fight against inflation and extending its effort to return monetary conditions.The cost of lending for banks is set to go up due to an increase in repo rate ,retail loans will face direct impact due to this.
Suren Goyal, Partner, RPS Group
We welcome the step of the apex body to increase the overall repo rates by another 50 basis points. This will help in clamping down inflation and smoothen economic growth. A rise in inflation can soften the stance on an otherwise robust real estate industry. Already raw material prices are increasing and an unbridled rate of inflation will further drive the input costs northwards, therefore resulting in cost overruns for the developer fraternity. In such a case they will have no option but to pass on the price to the homebuyers. Meanwhile, the government should also take concentrated efforts to reduce the spike in prices of raw materials such as cement, bricks, steel, etc. This will also give some relief to the sector.
Ravi Singhal, Vice Chairman, GCL securities Limited
Inflation target increased from 5.7 percent to 6.7 percent, exceeding the RBI’s target of 4 percent; repo rate increased by.50 basis point; and CRR remains positive for banking. The inflation target is for fiscal year 23.
Ridhima kansal, Director, Rosemoore
The lowering of the repo rate will ease the economy, control inflation, and set the stage for more sustainable growth. All these three parameters are greatly needed for retail sales to succeed in a vast country like India. The rate of inflation has been beyond the safe limit of 6% over the past few months and such a step was needed. A low-interest regime had to be altered toward a more holistic growth paradigm. Meanwhile, an overall robust economy will continue to drive retail sales in India, despite personal home finances becoming a little dearer. The job market is booming, e-commerce growing rapidly, and malls & shopping centres have resumed. This is a great sign for the retail industry in general. The current fiscal is the year, the industry was waiting for a while.