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Below the Quote on MPC announcement by Thomas J Priju, Portfolio Manager, Karma Capital

"The RBI's 25 bps hike to 5.50%, its first since February 2023, and the shift to a 'calibrated tightening' stance show the MPC putting inflation focus ahead of near-term growth, with CPI holding above the 4% target since June. Rate-sensitive sectors such as autos, real estate and consumer durables may stay under pressure in the near term. Banks could see support to margins, since loan rates reset faster than deposit costs, and short-end bond yields are likely to rise. We have a tilt towards large private banks in some of our portfolios which should be beneficiaries.

For the festive season, the effect on demand should be modest, because the increase in EMIs is small and transmission takes time. We expect consumer demand to be good on the discretionary side. Companies with pricing power would be big beneficiaries. Hence we have a strong preference for category leaders with a strong brand moat. Festive sentiment and better affordability should continue to support volumes. Going forward, the RBI's guidance on further hikes and crude prices will matter more for markets than this single move."

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