Prittle Prattle News surveyed views from Industry Tycoons for reactions and views
On Thursday, Mr. Shaktikanta Das, Governor of India, unanimously decided that the bi-monthly RBI’s Monetary Policy Committee (MPC) would preserve the repo rate unchanged at 6.50 per cent.
The policy has its share of surprise with a unanimous decision to keep the repo rate unchanged. This goes along with a tint of optimism compared with its outlook in the February policy. The GDP forecast is up marginally to 6.5%, and inflation is down to 5.2%. Though the difference is just 0.1% for both variables, the sentiment has been boosted, as reflected in the market, with ten-year yields moving down. This will ensure that yields remain stable.
The MPC is working on the premise that the base effect will lower inflation in the coming months but has a ringfenced view that the no rate change policy holds only for this policy. Hence, further rate hikes have yet to be ruled out if the inflation path changes.
Overall, a balanced and nuanced view has been taken, ensuring stability in this status quo situation while not committing to the future path that will be data-driven.
Mr. Madan Sabnavis, – Chief Economist, Bank of Baroda
“The RBI’s decision to keep the repo rate unchanged was a much-needed respite for the real estate sector. This decision will stabilize the home loan category and keep the EMIs unchanged. It will maintain the buying sentiment in the real estate sector and may lead to an upsurge in the mid-segment housing category. We also expect the demand for luxury and premium housing to remain unaffected. Despite the positive impact of this decision, the RBI Governor has signaled that this move may only provide temporary relief and may be necessary to combat the inflationary growth in the country. However, we hope that interest rates will remain in single digits, which would be favorable for the real estate sector in India. This decision will likely stabilize the real estate sector in the short term.”
Mr. Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate
“RBI’s pause in the repo rate is a prudent move that will help stimulate the credit flow and make lenders resilient from experiencing anticipated demand shocks. At the same time, an accommodative stance indicates that the central bank is committed to taming inflation and ensuring India’s financial system is not exposed to extraordinary factors.
The announcement made by RBI on permitting the operations of pre-sanctioned credit lines by banks through UPI is a transformative step towards a comprehensive digital economy. It would provide greater financial flexibility and convenience to borrowers. Overall, the expansion of UPI’s potential is a significant milestone set to unleash many benefits. This progressive step will not only enhance the convenience and flexibility of financial transactions but also pave the way for the further growth of the UPI platform. With the added feature of pre-sanctioned credit lines, we can expect a surge in transaction volumes and a more seamless user experience, increasing the adoption of digital payments nationwide.”
Mr. Pranay Jhaveri, MD – India and South Asia, Euronet
The central bank focuses on impeding fiscal growth while ensuring India’s financial system is not exposed to extraordinary shocks. The unchanged repo rate will provide more elbow room to the lenders to increase the credit flow. Today’s announcement by the central bank with an indication of an accommodative stance has laid out the path to policy unwinding. The pausing of the repo rate is a welcoming step. Before revisiting its aggressive stance on inflation, the policymaker should evaluate the impact of cumulative 250 bps rate hikes in the last financial year, especially MSMEs with retail borrowers. We hope that the conscious efforts by the policymakers stimulate the growth outlook of all the key sectors.
Mr. Prabhat Chaturvedi, CEO of Netafim Agricultural Financing Agency
RBI paused, as per our expectations. We are unsurprised that RBI mentioned that the pause is only for this MPC, and this action should not be extrapolated to future policies. It is too early for RBI to commit to a continued pause. There are still some risks to inflation. If those risks are present, RBI will only be wary of leading the markets.
Nonetheless, we have hit the peak rates unless inflation rises unexpectedly. RBI should not raise rates further. RBI would take time to confirm this policy stance as in the past. Thus, a rate pause may only be reinforced in the upcoming policies – when there is more clarity on data.
We have been advising investors to take longer debt maturity and add risk. We maintain our view. While there has been a bond rally, the current levels are still attractive to investors. A weaker US employment data may prompt US FED to sound cautious. If the global central banks pivot to more dovish statements, it is highly likely that so will RBI. While US yields have already reacted to worsening macro data, Indian yields have had a muted reaction. Thus, any softening stance from RBI may lead to a further rally for the Indian bonds.
Mr. Sandeep Yadav, Senior Vice President, Head – Fixed Income, DSP Mutual Fund
“The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is a welcome move signaling that interest rate hikes could be over. Also, time to balance growth and inflation. This will positively impact the rate-sensitive segments of affordable and low-income housing. Keeping the repo rate unchanged will help offset the rising property rates and reduce home buyers’ burden to a large extent. The real estate industry is linked with several other allied industries, impacting the economy. We urge the government to offer relaxations in stamp duty fees that it offered during the pandemic to encourage homebuyers’ interest in property buying further.”
Mr. Sandeep Runwal – President, NAREDCO Maharashtra
“Keeping the repo rate unchanged at 6.50 per cent is a good decision by RBI. This will help keep inflation in check and improve market sentiments, which is the need of the hour. This is a big booster for the real estate sector, which the recently concluded budget overlooked. We can look forward to seeing a resurgence in real estate demand. We hope that the State Government will step in again to lighten the homebuyer’s load by reducing stamp duty to boost the sentiments further.”
Mr. Pritam Chivukula – Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI
“Keeping the current market conditions and inflation in mind, the move by the RBI to keep the repo rate unchanged is a welcome one. This will help in keeping the economy on track and controlling inflation. We expect demand for housing to rise, more stability to property prices coupled with market sentiments improving. Also, for first-time home buyers, acquiring a home is considered the biggest asset, positively impacting a buyer’s decision.”
Mr. Himanshu Jain, VP – Sales, Marketing, and CRM, Satellite Developers Pvt. Ltd. (SDPL)
“A good decision by RBI to keep the repo rate unchanged at 6.50 per cent. This will positively impact the entire real estate spectrum and value chain. Housing demand will increase, and the momentum we saw in the last couple of quarters will continue.”
Mr. Bhushan Nemlekar, Director, Sumit Woods Limited
“The decision by the RB
I to leave repo rates unchanged at 6.50 per cent is a good move which will halt inflationary trends and increase housing demand. We expect market sentiments to improve as more liquidity enters the sector. Further, we look forward to the government lowering stamp duty rates, which will bring cheer to homebuyers, driving housing demand.”
Mr. Manoj Patwal, Founder & MD, BetterServ Ventures Pvt. Ltd.
“The RBI’s decision to keep the repo rate unchanged at 6.50 per cent is in line with consumer sentiments. The real estate sector will see increased demand for housing while keeping inflation in check. This would also help bring more liquidity into the sector, thus balancing growth.”
Mr. Samyak Jain, Director, Siddha Group
“The RBI’s decision to leave the repo rate unchanged at 6.50 per cent will help market sentiments soar. This will keep inflation in check, improve housing demand and enhance the sector’s growth. This will offset the huge financial burden on home buyers and will now see home buyers actively seeking to buy their desired home.”
Mr. Kairav Shah, Chief Sales Officer, Labdhi Lifestyle
The central bank focuses on impeding fiscal growth while ensuring that India’s financial system is not exposed to extraordinary shocks. The unchanged repo rate will provide more elbow room to the lenders to increase the credit flow. Today’s announcement by the central bank with an indication of an accommodative stance has laid out the path to policy unwinding. The pausing of the repo rate is a welcoming step. Before revisiting its aggressive stance on inflation, the policymaker should evaluate the impact of cumulative 250 bps rate hikes in the last financial year, especially MSMEs with retail borrowers. We hope that the conscious efforts by the policymakers stimulate the growth outlook of all the key sectors.
Mr. Prabhat Chaturvedi, CEO of Netafim Agricultural Financing Agency
“RBI’s pause in the repo rate is a prudent move that will help stimulate the credit flow and make lenders resilient from experiencing anticipated demand shocks. At the same time, an accommodative stance indicates that the central bank is committed to taming inflation and ensuring India’s financial system is not exposed to extraordinary factors.
The announcement made by RBI on permitting the operations of pre-sanctioned credit lines by banks through UPI is a transformative step towards a comprehensive digital economy. It would provide greater financial flexibility and convenience to borrowers. Overall, the expansion of UPI’s potential is a significant milestone set to unleash many benefits. This progressive step will not only enhance the convenience and flexibility of financial transactions but also pave the way for the further growth of the UPI platform. With the added feature of pre-sanctioned credit lines, we can expect a surge in transaction volumes and a more seamless user experience, increasing the adoption of digital payments nationwide.”
Mr. Pranay Jhaveri, MD – India and South Asia, Euronet
“RBI surprised the markets by not hiking policy rates. RBI, however, maintained its stance of withdrawal of accommodation. RBI has upped its GDP growth forecast to 6.5 versus 6.4 previously, and the CPI inflation forecast has decreased to 5.2 versus 5.3. It also indicated it is only a pause in rates right now. Real rates, the difference between expected CPI inflation and Repo rates, now stand at 1.3 % positive. The bar is now high for RBI to hike rates in the upcoming policy unless macroeconomic conditions change dramatically. The ten-year G sec yield is expected to trade in the 7.10%- 7.30% range and may move towards 7 % levels if CPI inflation moves towards 5 % targets.”
Murthy Nagarajan, Head- Fixed Income, Tata Asset Management:
“In line with our expectations (against market consensus), RBI did not hike policy rates and maintained its stance. Given the current level of policy rates and expected inflation trajectory, RBI stopped short of excessive tightening, which could have impacted economic activity in the current volatile global backdrop. We believe this is the end of the hiking cycle (policy rates) unless there is a significant negative shock on the inflation front in the future. RBI is likely to manage operating rates through a liquidity corridor.
Bond markets have witnessed a fall in yields (5-15 bps) across the curve. We may see the overall yield curve trajectory slowly going downwards, with a flattening bias. We expect 10 yr benchmark g-sec trading in the 7.10%-7.30% range near future and then may move towards 7% over the next six months. We hope debt funds do well as yields move downwards. Longer duration funds generally augur well in such cycles.”
Disclaimer: The views expressed in this article are personal and in no way trying to predict the markets or time them. The opinions expressed are for information purposes only and do not construe to be any investment, legal, or taxation advice. Any action you took based on the information contained herein is your responsibility alone, and Tata Asset Management Pvt. Ltd. will not be liable in any manner for the consequences of such action you took. Please consult your Mutual Fund Distributor before investing. The views expressed in this article may not reflect in the scheme portfolios of Tata Mutual Fund. The opinions expressed are based on the current market scenario and are subject to change. There are no guaranteed or assured returns under any of the schemes of Tata Mutual Fund.
Mutual Fund investments are subject to market risks; read all scheme-related documents carefully.
Akhil Mittal, Senior Fund Manager – Fixed Income, Tata Asset Management:
The recent decision by the Reserve Bank of India (RBI) to stand pat on repo rates is good news for the real estate sector. This pause in rate hikes will encourage homebuyers to take advantage of lower home loan rates and invest in property, driving growth in the industry. Stable interest rates provide attractive financing options, making it easier for potential buyers to purchase homes and stimulating the market. This move will also give a breather to existing homeowners burdened with rising EMIs due to the rate hikes witnessed in the past six policies. Overall, the RBI’s decision favor keeping the real estate market vibrant and prosperous.
Mr. Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory
