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Daily Voice: RBI unlikely to hint at interest rate cut in October policy meeting, says First Water Capital's Arun Chulani

Money ControlMoney Control · 1y ago
Daily Voice: RBI unlikely to hint at interest rate cut in October policy meeting, says First Water Capital's Arun Chulani
Medial

Arun Chulani, Co-Founder of First Water Capital, believes that the Indian central bank (RBI) is unlikely to hint at a rate cut in its October policy meeting. Chulani stated that the RBI runs a tight ship and with the economy still growing at 7-8%, there is no immediate requirement for a stimulus to increase demand. He also emphasized the potential for growth in the chemical sector and highlighted the attractiveness of sectors like flexible packaging and private banks in the current market environment. Chulani mentioned that India offers long-term tailwinds, such as young demographics and infrastructure spending, making it an appealing investment destination.

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As RBI relents on policy stance, what is the outlook for Indian equities?

Money ControlMoney Control · 12m ago
As RBI relents on policy stance, what is the outlook for Indian equities?
Medial

the MPC meeting, several factors were considered that led to the change in policy stance: 1. Economic slowdown: The Indian economy has been facing a slowdown, with GDP growth falling to its lowest level in recent years. The rate cut is expected to provide a boost to the economy and revive growth. 2. Inflation outlook: The inflation rate has remained well within the RBI's target range, providing room for a rate cut. Lower interest rates can help stimulate consumption and investment, driving inflation higher. 3. Global factors: Weak global growth and uncertainty due to trade tensions have also influenced the decision. The RBI believes that a rate cut could help counter potential external risks and support domestic demand. 4. Liquidity conditions: The banking system has been facing liquidity constraints, which have impacted credit flow in the economy. The rate cut is expected to improve liquidity conditions and make credit more easily available. 5. Policy transmission: Despite previous rate cuts, the benefits were not fully passed on to borrowers. The RBI expects that a change in policy stance will encourage banks to transmit the rate cut to borrowers more effectively. 6. Market expectations: Market participants were anticipating a rate cut, and the change in policy stance aligns with these expectations. This move is seen as a positive signal for the stock markets and investor sentiment.

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