Published on: December 8, 2023
The Reserve Bank of India just announced it’s keeping the repo rate (the interest rate banks use to lend to each other) right where it is at 6.5%. This means no change for your loan or deposit rates for the time being, which is good news for your wallets!
The Nifty Bank (Bank Nifty) has hit a high of 47,170 but failed to surpass an all-time high (ATH) of 47,259. Let’s look at the key takeaways from monetary policy.
Key Takeaways:
- Repo rate remains unchanged at 6.5%
- Policy stance remains ‘withdrawal of accommodation’
- GDP growth projection revised upwards to 7% from 6.5% for FY24
- Inflation forecast remains unchanged at 5.4% for FY24
- Markets trading at near-all-time high levels
Why the Hold?
The RBI’s decision to hold the repo rate was likely influenced by several factors, including:
- Rising food inflation: Prices of vegetables have seen a recent spike, raising concerns about overall inflation levels.
- Better-than-expected GDP growth: The Indian economy grew at a robust 7.6% in the second quarter, exceeding expectations.
- Need to manage inflation-growth balance: The RBI is walking a tightrope between supporting economic growth and controlling inflation.
What Does This Mean for You?
- Interest rates on loans and deposits are likely to remain unchanged.
- Borrowers will continue to benefit from lower EMIs.
- The RBI’s focus on inflation could lead to higher interest rates in the future.
Looking Ahead:
- The RBI will likely continue monitoring inflation closely and adjusting its policy stance as needed. It is important to note that the global economic environment remains uncertain, which could pose challenges for the Indian economy in the coming months.
Markets React Positively:
The Indian stock market reacted positively to the RBI’s decision, with the Sensex and Nifty trading at near all-time high levels. This suggests that investors are confident about the future of the Indian economy.
Since the market responded favourably, let’s examine the insights our exclusive Eagle Price and RS Scanner provided.
Below is the list of stocks based on their relative performance against Nifty Bank.
Source: RZone, Definedge Securities, Data as per closing of 7th Dec 2023