Equity View on RBI policy by Christy Mathai, Fund Manager -Equity

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The MPC, broadly in line with market expectation kept the interest rates unchanged. The impact of steep rate hike of 250 bps over the last year; is still being absorbed by the system and with headline inflation is coming off and projected to be lower in FY24; it's prudent to adopt a wait and watch approach.

 

From equity markets point of view, it is quite clear that the rate hikes cycle is over (unless there are major global dislocations) and current policy will not cause any hiccups to the growth trajectory that the country on. Most of the domestic indicators are looking positive; credit growth despite coming off a high base should also remain resilient and current policy stance will not derail that trajectory.

 

Unlike the developed world, which is witnessing high interest rates after a long period of time; Indian interest rate regime is getting normalised to pre-covid levels and hence will not dampen the growth or investment activity in the country.