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Asian markets showed mixed performance amid concerns over South Korea's political situation and anticipation of new stimulus from Beijing. Indian indices, including Sensex and Nifty 50, are expected to open lower, following a volatile session where Nifty closed below 24,700 after the RBI maintained the repo rate and reduced the CRR to enhance liquidity.
The Nifty 50 index experienced moderate losses after five consecutive days of gains, closing at 24,678 on December 6, as investors took profits following the RBI's expected outcome. Resistance is anticipated at the 24,700 and 24,800 levels, while immediate support is found between 24,500 and 24,400, with 24,200 as the next key support level.
RBI deputy governor Michael Patra highlighted that sluggish consumption growth is primarily due to high inflation, which has led to decreased consumer incomes. A recent survey revealed that 24.5% of respondents reported income declines, with a net response of -0.7 percentage points, the lowest since May 2023. Additionally, 42.4% noted worsening job prospects, resulting in a net response of -7.8 percentage points, although this marks an improvement from the negative 33.1 percentage points recorded in January 2020.
The RBI's recent CRR cut aims to enhance liquidity amid volatility, providing banks with a significant boost of Rs 1.16 lakh crore. This move is seen as a precursor to potential monetary easing, with expectations of future rate cuts contingent on favorable inflation trends. The adjustment aligns with pre-Ukraine war rates, addressing current liquidity challenges.
The RBI has cut the Cash Reserve Ratio (CRR) by 0.5% to 4% of banks' net demand and time liabilities, while maintaining the repo rate at 6.50% and a 'Neutral' policy stance. This decision, supported by a majority of the Monetary Policy Committee, aims to keep financial conditions conducive for growth amid rising near-term inflation risks.
The Reserve Bank of India (RBI) maintained the policy repo rate at 6.5% during its recent Monetary Policy Committee meeting, balancing inflationary risks with growth concerns. To address tight liquidity, the RBI implemented a staggered 50 basis points cut in the cash reserve ratio, effective in two tranches.
RBI Governor Shaktikanta Das announced that the repo rate remains unchanged during the post-monetary policy press briefing. The decision reflects the central bank's current stance on monetary policy amidst ongoing economic considerations.
The MPC has opted to retain key interest rates while implementing a 50 basis point cut in the cash reserve ratio (CRR), a strategic move amid current growth-inflation dynamics. This decision reflects a cautious approach following disappointing second quarter GDP figures and recent inflation data.
The Reserve Bank of India has revised its inflation forecast for FY25 to 4.8%, with upward adjustments for Q3 and Q4. Meanwhile, India's GDP growth for Q2 FY25 has slowed to 5.4%, the lowest in two years, significantly below the RBI's projection of 7%, primarily due to weak manufacturing and mining sectors.
Nifty's potential rise to 25,000 is under scrutiny amid increasing market volatility, with the outcome of the RBI policy being a key focus for investors. The opening bell signals a critical moment for traders as they navigate these developments.
RBI Expr.Z./Mercedes 24-29
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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