Mumbai, Sep 30 (FN Agency) India Inc on Friday gave mixed reaction to Reserve Bank of India (RB)’s decision to increase repo rate by 50 bps to 5.9 per cent.Sanjay Palve, Senior Managing Director, Essar Capital Ltd said, “MPC’s decision announced today of hiking repo rate by 50 bps to 5.9% was broadly along the expected lines. With the financial markets and the global economy facing a turmoil due to various geo political reasons are alarming high inflation levels. RBI’s stand to stay predictable this time with the focus remaining squarely on inflation will help alleviate market sentiments.” “Despite global headwinds, RBI’s optimism on growth has been significant inclined towards impressive performance of the economy in the last few months. India being placed at a much better place as against other high inflation economies projects an progressive economic situation,” he said. Avinash Godkhindi, MD and CEO of Zaggle, said, “RBI’s decision to hike the repo rate by 50 bps is on expected lines and will help in taming the retail inflation which has remained high over the last few months.
It may also help in addressing another concern of a depreciating rupee. In the past few months, the country has experienced an increase in investment activity suggestive of an economic revival and the current festive season is expected to give a further fillip to the economic activities.” “Amid several other short term global macro concerns such as geo-political tensions, global financial market volatility, crude oil prices, supply side disruption, and tightening global financial conditions, India remains the beacon of hope and an ocean of opportunity and RBI’s move is in the expected and right direction,” he said. Sandeep Bhardwaj, CEO, IIFL Securities, said, “RBI raised repo rate by 50 bps to 5.9 per cent from 5.4 per cent with the central bank continuing to remain focused on the “withdrawal of accommodation” stance while supporting growth. Though inflation continues to be at elevated levels, the recent correction in the commodities and crude oil prices, if sustained, can ease the inflationary pressures.
There was a growing concern about the fall in forex reserves and the RBI Governor came up with a statement that calmed these concerns by saying that 66 per cent of the fall in forex reserves is due to the valuation changes arising due to appreciating dollar and higher bond yields.” “The policy is positive for the Banks and the nifty bank index can retest the 10 day EMA situated at 39000 levels,” he said. Vikas Garg, Head of Fixed Income, Invesco Mutual Fund, said, “Amidst challenging global monetary policy backdrop, RBI stays with a 3rd consecutive rate hike of 50 bps and keeps a tight vigil on domestic inflation. Continuation with “withdrawal of accommodation” signals more rate hikes to come.” “External factors holding well as of now but needs to be monitored closely. Re-assurance on ample systemic liquidity provides relief to the shorter segment. Overall, in line with market expectations as of now but we expect market volatility to remain high with fast evolving global backdrop,” he said. The RBI on Friday hiked repo rate, the rate at which it lends money to commercial banks, by 50 basis points to 5.40 per cent.