After the Reserve Bank of India (RBI) decided to maintain its position focused on “withdrawal of accommodation” and keep policy rates constant, stocks in the banking sector remained mainly stable on Thursday.
“The Indian economy is ideally balanced between growth and inflation under the RBI’s navigation. The market will be pleasantly surprised if the GDP growth for FY24 comes as per the expectations of the RBI at 6.5%,” Nilesh Shah, an economist for Monetary Policy, said, according to The Economic Times.
Stocks in other rate-sensitive industries, such as the auto and real estate industries, meanwhile, were hit by profit booking, The Economic Times reported.
The consequence of the RBI policy was as expected, and stock prices had already accounted for it, according to The Economic Times. Stocks in the real estate and automotive industries have risen recently, with the Nifty Auto and Nifty Realty indices reaching all-time highs. The policy statement contained no significant shocks, thus Dalal Street investors were able to lock in some profits in the rate-sensitive industries.
Now that the U.S. Federal Reserve has announced its policy course for the coming week, the market will be waiting to see how the central bank views the economy and the trajectory of interest rates for the remainder of the year, The Economic Times reported. Although the rate of monetary policy tightening has been moderated recently around the world, uncertainty still exists on the trajectory of policy tightening, according to RBI Gov. Shaktikanta Das. On the domestic front, macroeconomic fundamentals are improving, although the monsoon outlook and possible El Nino conditions’ effects are still uncertain. However, the central bank maintained its upbeat outlook for domestic growth prospects and its 6.5% GDP growth prediction for FY24.
“The stock market’s muted reaction to the policy announcements today reflects investors’ anticipation of the status quo,” Sonam Srivastava of Wright Research said, according to The Economic Times.
