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Shares of banks are likely to be under pressure ahead of the Reserve Bank of India's midquarter policy review on Wednesday, as most market players expect the central bank to hike the repo rate. We expect the RBI to announce a 25 basis points hike in repo rate. There are two crucial meetings due in the next week. (RBI) credit policy and FOMC (US Federal Open Market Committee). Till the outcome of these meetings, banks (stocks) will be under pressure. At the US Federal Open Market Committee's meeting, next week, the US Fed is likely to deliberate on tapering its monetary stimulus. The US Fed's decision on the timing and quantum of any cutback in its bond purchases has huge implications on bank stocks, rupee's exchange rate and on gilt yields. The RBI is likely to hike its repo rate by 25 bps to contain persistently high inflation. The central bank has repeatedly flagged concerns over rising inflation, and said monetary policy has to be framed carefully in a situation of high inflation and low growth. Banking stocks should be seen at major supports. RBI meet will be crucial for banking sector.
Shares of banks are likely to be under pressure ahead of the Reserve Bank of India's midquarter policy review on Wednesday, as most market players expect the central bank to hike the repo rate. We expect the RBI to announce a 25 basis points hike in repo rate. There are two crucial meetings due in the next week. (RBI) credit policy and FOMC (US Federal Open Market Committee). Till the outcome of these meetings, banks (stocks) will be under pressure. At the US Federal Open Market Committee's meeting, next week, the US Fed is likely to deliberate on tapering its monetary stimulus. The US Fed's decision on the timing and quantum of any cutback in its bond purchases has huge implications on bank stocks, rupee's exchange rate and on gilt yields. The RBI is likely to hike its repo rate by 25 bps to contain persistently high inflation. The central bank has repeatedly flagged concerns over rising inflation, and said monetary policy has to be framed carefully in a situation of high inflation and low growth. Banking stocks should be seen at major supports. RBI meet will be crucial for banking sector.
