RBI MPC meeting: How stock market will react if governor Shaktikanta Das cuts repo rate

This time, the RBI's monetary policy has to tackle both rising inflation as well as India's GDP growth slowing down to 5.4% for the July-September quarter

Published on: Dec 6, 2024, 09:33:49 IST

By HT News Desk

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India's stock market is keenly awaiting the Reserve Bank of India's (RBI) bi-monthly monetary policy announcement on Friday, December 6, 2024.

Reserve Bank of India (RBI) Governor Shaktikanta Das speaks to the media after presenting decisions taken by Monetary Policy Committee in Mumbai, India, Friday, June 7, 2024 (Rajanish Kakade/AP)

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This comes at a time when the market is hoping for a liquidity boost, though a large number of economists expect the RBI to keep the repo rate unchanged at 6.5%, especially at a time when inflation is persistently high, according to a Moneycontrol report.

However, signs of a slowing economy are also part of the picture, with India's GDP growth slowing to 5.4% for the July-September quarter. According to the report, this may result in a repo rate or cash reserve ratio (CRR) cut.

“The Indian economy is in a cyclical slowdown,” Nomura economist Aurodeep Nandi said in an interaction with CNBC TV18. “Lower credit growth will impact domestic demand, and government spending needs to ramp up to meet targets.”

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A CRR cut, even without a repo rate cut can provide the liquidity boost which the markets are seeking, the report quoted Kranthi Bathini, director of equity strategy at WealthMills Securities as saying.

Markets are anticipating liquidity measures, the report quoted Ajit Mishra, SVP-Research at Religare Broking as saying. However, he also warned that a "knee-jerk reaction, especially in banking stocks can happen if a rate cut doesn't happen.

This comes when the stock market surged on Thursday, December 5, 2024 due to global optimism and strong foreign institutional investor (FII) inflows worth ₹8,540 crore.

The benchmark BSE Sensex jumped over 800 points to close at 81,765, while the NSE Nifty gained more than 240 points to close over 24,700.

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HT News Desk
Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.Read More

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