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Sensex zooms over 850 points as RBI keeps repo rate unchanged; here's what experts say

Sensex zooms over 850 points as RBI keeps repo rate unchanged; here's what experts say

Indian benchmark indices were trading sharply higher as there were no negative surprises. The 30-share BSE index was trading 876 points or 1.52 per cent higher at 58,509.62, and the broader NSE Nifty was up 252 points or 1.47 per cent to 17,357.15.

Sensex zooms over 850 points as RBI keeps repo rate unchanged; here's what experts say Sensex zooms over 850 points as RBI keeps repo rate unchanged; here's what experts say

Amid concerns over the Omicron variant of COVID-19 and high inflation, the Reserve Bank of India (RBI) on Wednesday decided to keep the policy rates unchanged.
 
Announcing the MPC's decision, RBI Governor Shaktikanta Das said, "MPC voted unanimously to maintain status quo with regard to the policy repo rate and by a majority of 5 to 1 to retain the accommodative policy stance. The policy repo rate remains unchanged at 4 per cent."
 
Indian benchmark indices were trading sharply higher as there were no negative surprises. The 30-share BSE index was trading 876 points or 1.52 per cent higher at 58,509.62, and the broader NSE Nifty was up 252 points or 1.47 per cent to 17,357.15.
 
Bajaj Finance, ICICI Bank, Bajaj Finserv and HCL Tech were among the top gainers on Sensex, rising up to 2-3 per cent.
 
How will the markets react going forward? Here's what experts are saying:
 
Ashish Sarangi, RIA and CSO of Pickright Technologies, Smart Investment Platform
 

The much-awaited RBI Monetary policy is out and we welcome this move by MPC on maintaining the interest rate flat. This will further boost the auto sector mainly targeting 4 wheelers and CVS. This is currently the hot market as we are seeing many innovations and new players entering the space.
 
Housing sector which is currently reeling under mild depression will see a boost as investors will take advantage of low-interest rates and start investing. So, we see an upward move in the stocks of the housing sector in the near long term.  We have already seen indicators on how the market reacted to the policy and there is already a buoyant of the needle going north. Blue-chip indices are trading with gains.
 
We strongly feel that this quarter and next coming quarter will be very much positive for auto, Bluechip, housing sectors and there will be continuous growth. Investors can remain cautiously positive and look forward to economic revival and come out of omicron’s fear.
 
Sonam Srivastava, Founder at Wright Research

 
The markets will meet this policy with a cheer as it is very accommodating to growth, and the country’s inflation expectation analysis remains very positive.
 
This is in line with the expectations of the markets and thus, positive sentiment is likely to bolster growth in sectors such as banking, real-estate, export/imports and manufacturing. The stock prices of companies in these domains are likely to see a price rise. It is indeed a great time for investors to be invested in the market.
 
Abhay Agarwal, Founder, Piper Serica
 
Overall, we expect that stock markets will be relieved that there are no negative surprises, and the stance stays accommodative. The recent fragile recovery in consumer discretionary space like real estate and automobiles is expected to continue as there is greater certainty on borrowing costs and EMIs that drive consumer decisions.
 
The short-term funds are expected to yield slightly higher returns now. The fixed-income investors should continue to stay in the shorter duration funds as the long-term funds may see a price erosion in case of an increase in long-term GSec rates.

Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services

The MPC expectedly kept the key rates unchanged unanimously and reiterated its accommodative stance both on rates and liquidity. However, Prof Jayanth Varma’s possible dissent on continuation of accommodative stance for foreseeable future continues to keep MPC in split state. There were no material changes in growth and inflation outlook in near term.

The focus was on communication on liquidity management key amid evolving market risks. As expected, the RBI did not opt for a reverse repo hike, and the policy is well used as a lever to prepare markets for a gradualist approach toward normalization through both communication and action.
 
Jyoti Prakash Gadia, Managing Director, Resurgent India Limited
 
Reposing faith in the visible growth impulses and control on projected inflation, a status quo on the policy rates has been maintained by RBI on expected lines.
 
Simultaneously, the continuation of accommodative stance also bodes well for the emergence of a vibrant economy, out of the sustained revival path. This will, however, require the additional capital expenditure in the desired sectors, besides the steps already initiated on boosting demand and removing supply-side constraints.
 
On the liquidity front also, RBI has indicated a calibrated approach, with an additional amount of Rs 1.50 lakh crore for 14 days VRRR, and allowing prepayment of TLTRO aiming at a rebalancing of liquidity in a phased manner. Overall, a hand holding policy for growth with a hawkish eye on inflation.