Closing Bell: Sensex rises 89 pts after 1-day break, Nifty ends near 17,400; IndiGo jumps 5%, M&M drops 2%

Wall Street opens lower as strong jobs data fuels rate-hike worries

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Despite the rate hike being on the higher side of the expectations, the market welcomed the RBI's move of 50 basis hike with rising bond yields. Even though metals prices are softening, RBI decided to keep FY23 inflation targets unchanged at 6.7 percent, which is above the tolerance level. However, given that Q3 and Q4 inflation is anticipated to be between 4.0 percent and 4.1 percent, the market is hopeful for the future.

- Vinod Nair, Head Of Research at Geojit Financial Services

Nifty remained range bound before closing flat for the day. On the daily chart, it formed a Doji pattern which suggests indecisiveness. The momentum indicator RSI is nn bullish crossover. The trend is likely to remain sideways to negative as long as it remains below 17500. On the lower end, support exists at 17200/17000.

- Rupak De, Senior Technical Analyst at LKP Securities

NIFTY AUTO worst performer on NSE

Closing Bell: Sensex rises 89 pts after 1-day break, Nifty ends near 17,400; IndiGo jumps 5%, M&M drops 2%

RBI Governor raised interest rates by 50 bps though our expectations was around 25-35 bps. Despite downward trajectory in inflation and prices of global commodities easing, the uncertainty on geopolitical front, strong demand outlook has given RBI comfort to somewhat frontload the rates. Globalization of inflation and deglobalization of trades has led to a challenging situation to deal with for central bankers. With economic activity broadening, capacity utilization increasing along with rise in consumer expenditures, we believe this hike of 50 bps will give some breathing space to RBI in this rising interest rate cycle which is withdrawal of accommodative stance. Despite interest rate rising, RBI has retained project for growth rate at 7.2% for 2022-23 is a big positive takeaway from this policy. We believe RBI is doing a great job in managing inflation without damaging growth and to add is doing fine job in managing currency.

- Dr Rashmi Saluja, Executive Chairperson, Religare Enterprises on RBI Monetary Policy

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50bps repo rate hike to 5.4% by the RBI makes the policy rate is the highest since Aug '19. On the positive note, maintaining the real GDP growth forecast of 7.2% for FY23 is liked by the street. It seems to be more worried about external global factors this time, which has weakened INR recently. The 3rd consecutive rate hike by RBI since May’22 cumulatively 140 bps in its effort to contain inflation would certainly increase cost of borrowing and would impact few consumer sectors. We expect real estate sector to remain most affected, while financial sector would be benefited with the likely NIM expansion with higher spread.

- Mr. Mitul Shah, Head of Research at Reliance Securities on RBI Policy

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Titan Company on Friday reported a 13-fold jump in year-on-year (YoY) net profit at Rs 793 crore in June quarter compared with Rs 61 crore profit in the same quarter last year. The Tata Group firm said its quarterly revenues were the second-best, buoyed by a strong festive demand in a near normal Ql that came after a gap of two Covid disrupted periods.

The rate hike is very welcome which is why the markets are also reacting by being in the green. There is a lot of excess liquidity in the system that needs to be flushed out. Inflation is currently at 7.1% while the RBI's target has always been sub-6%, I see additional measures coming up in the next few months. In terms of rate rike, maybe another 50 basis point hike and increase the CRR and SLR reserves to suck out more liquidity from the system.

- Suman Bannerjee, CIO, Hedonova on RBI Policy

Macrotech Developers: Ivanhoe Op India, the real estate arm of Canadian Pension Fund offloaded 70.29 lakh shares or 1.5 per cent stake of realty major at an average price of Rs 1,047.21 apeice and Rs 1,048 for Rs 736.28 crore through open market transactions.

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Moody's said it has upgraded private lender's rating while changing outlook to 'stable' on the back of its equity capital raise plan announced last week. The global rating agency has upgraded the private sector lender's long-term foreign currency issuer rating and long-term foreign and local currency back deposit ratings to 'Ba3' from 'B2'.

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Quite likely, going forward we will see a 25 bps rate hike. The terminal repo rate earlier was somewhere around 6-6.25% but last one month’s inflation easing off has brought it down to 5.75-6%. So we are already at a level with this 50 bps hike and can afford to do 25 bps rate hikes over the next six months. Undoubtedly the market will be pricing in a 25 bps rate hike going forward.

- Nilesh Shah, MD, Kotak AMC

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Markets were expecting a rate hike between 35-50 bps, so the RBI hike of 50 bps is on the higher side of the expectations. The RBI emphasized that it remains committed to the withdrawal of the liquidity to the contain the inflation. However, the governor did mention that the signs of moderation in inflation are emerging in form of ease in metals and food commodities and inflation is expected to be within the tolerance limit at 5.8% by Q4FY23. There was no forward guidance on the rate trajectory going forward, however, we believe that with much of the front loading behind us and oil prices also easing, RBI will go for a 15bps - 25bps hike in the next MPC meeting.

- Ritika Chhabra- Economic and Quant Analyst, Prabhudas Lilladher

RBI policy was hawkish and the MPC delivered a frontloaded 50 bps rate hike compared to market expectations of 35-40 bps hike, thereby taking the policy rate above pre-Covid levels. The central bank has retained the inflation target for FY23 at 6.7%, despite the softening of base metal and food prices from their earlier highs. The RBI mentioned that the domestic economic activity is showing signs of broadening with improving credit growth, pick-up in investment activity and rising capacity utilization. However, risks like geo political concerns and global financial market volatility and tightening financial conditions will weigh heavily on the outlook. With that, RBI retained the GDP growth forecast for FY23 at 7.2%.

- Sampath Reddy, CIO, Bajaj Allianz Life Insurance

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With inflation expected to be above 6% for Q2 and Q3, we expect regular RBI interventions in the next 2 quarters - Q2 and Q3 of FY 23 - to ensure rupee stability. With inflation expected to go below 6% in Q4 of FY 23 and then to go down further in Q1 of FY 24, we expect RBI to not to use rate hikes as a tool anymore in those quarters and move to liquidity management measures to ensure that the growth is not stifled. Rural demand still shows a mixed trend despite a broadening economic activity and hence we expect the RBI to use rate hikes more sparingly.

- Vivek iyer- Partner and leader , Financial services risk, Grant Thornton Bharat

RBI MPC voted unanimously hike repo rate by 50 bps to 5.4% - taking to pre pandemic levels. RBI MPC is line with our expectations. Inflation seems to be at the forefront of the move as they maintained CPI forecasts intact at 6.7% for FY 23. To us, this means we are not done with rate hiking cycle yet and we could brace for continued northward journey in rates. Withdrawal of accommodative stance has been maintained. We see this as a “no dovish” undertone policy contrary to markets expecting a dovish stance. Bond markets would now focus on incremental gsec supply and take cues from global bond yields going forward. Staggered investment approach in fixed income stays.

- Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company

RBI's action and statement today was not as dovish as we expected. Therefore, it is very likely that the terminal rate in this rate hike episode will be higher than our expectations. We, thus, revise it to 5.75-6% from 5.5% expected earlier.

- Nikhil Gupta, Chief Economist at MOFSL Group

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ET NOW SOURCES

We had expected the RBI to hike the interest rate by 25-35 basis points. However, it has hiked by 50 basis points. One of the reasons why the RBI has decided to act a tad aggressive in hiking the rate of interest is to protect the Indian currency.

- Sunil Damania, Chief Investment Officer, MarketsMojo

The 50 bp repo rate hike came 15 bp higher than the majority expectation of a 35bp hike. It is evident that the MPC is frontloading the rate hikes since it feels that "CPI inflation is above comfort levels". The MPC has been emboldened to go for this 50 bp hike since "the economic activity is resilient" and "withdrawal of accommodation stance is necessary to anchor inflation expectations". The RBI governor went so far as to say that "the Indian economy is holding steady in an ocean of turbulence". The capacity utilization in industry at 75% is higher than the long-term average. This positive view on the economy has been well received by the stock market in spite of the higher at hand expected repo rate hike.

- Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

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With inflation expected to remain above the upper tolerance threshold in Q2 and Q3 of the current financial year, the MPC stressed that sustained high inflation could de-stabilise inflation expectations and harm growth in the medium term.

- RBI Governor Shaktikanta Das said while announcing the policy decision.

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- Shaktikanta Das, RBI Governor

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Consumer price inflation remains uncomfortably high; inflation expected to remain above 6%

- Shaktikanta Das, RBI Governor

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Inflation expected to remain above tolerance levels

- Shaktikanta Das, RBI Governor

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- Shaktikanta Das, RBI Governor

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The private lender will wind up its UK subsidiary following termination of an agreement to sell 100 per cent of the stake to OpenPayd Holdings. In March 2021, Axis Bank had informed the exchanges about entering into a share purchase agreement with OpenPayd Holdings for sale of 100 per cent stake in Axis Bank UK.

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