The RBI announces…

The RBI announced a rate cut both in repo rate and reverse repo rate cut by 100bps to make loans cheaper to stimulate growth. The industry is expecting a CRR cut which did not materialized or postponed for around of press conference.

The central Govt. announced a feeble rate cut on diesel can not make a substantial impact on the transport sector but beneficial self owned generator operators especially in cement sector and for some emergency power generators. Like wise the RBI measures won’t affect the market at large as the banks has to borrow from RBI to lend and they will be under scanner. So the liberty of lending is being fixed but the paper statements of availability of adequate liquidity cannot trigger the economic activity. The reasons are simple as the consumption from exports contacted will become excess supply at home and the hype of recession across the world will make the buyer in India to think twice before “commits”.

The growth in reality is there but postponed for various reasons can get some bottom support temporarily at least at the stock prices. The encouragement to housing below 20 lakh category is a good sign.

I personally think that the stock markets already factored the 100 bps cut in repo and reverse repo rates can little be over exuberated but the housing and reality may rise. No big surprise, so just follow the global trend for time being.