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Below Quote On Post RBI Policy Announcement By Ms Palka Arora Chopra, Director, Master Capital Services Ltd

The market will undoubtedly feel relieved following today's RBI Policy stance as the repo rate has remained unchanged. The RBI's latest decision has maintained the repo rate at 6.5%. Headline inflation remains above the target and is expected to stay elevated in FY24. Despite this, the RBI is confident in the Indian economy and the resilience of the financial sector. The current interest rates are deemed sufficient to manage inflation and support fixed-income markets, aided by increased liquidity from deposits of Rs. 2000 notes, government spending, and RBI interventions. FY24 is projected to witness inflation above 5%.

To ensure that inflation progressively aligns with the target going forward, the RBI's policy stance as "withdrawal from accommodation" indicates that rate softening is unlikely in the near future.

Inflation remains the central bank's top concern, and the Monetary Policy Committee maintains a vigilant approach until the 4% target is achieved. Consequently, the Indian equity markets are expected to remain stable, with no significant corrections anticipated in the Bank Nifty index. Declining CPI inflation and a forecast of normal monsoon further support this outlook.

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