Experts hail RBI Governor Shaktikanta Das! Here is BIG reason why!
RBI has announced an unconventional cut of 35bps which is mildly positive for the market. It is a good policy and should help improve liquidity.
The Reserve Bank of India (RBI) cut down the repo rate by 35 bps to 5.4 per cent in its recent monetary policy committee (MPC) meeting. This decision of the Governor Shaktikanta Das led committee is in sync with the speculation that was coming from market experts before the MPC meeting. Speculation was rife that RBI may cut repo rate by either 25 bps or 50 bps. Industry experts are of the opinion that the RBI decision to cut repo rate is mildly positive for the market. They are of the opinion that it is a good policy and should help improve liquidity, consumption and demand scenario in the economy albeit with a lag. We continue to expect further cuts from the RBI, as based on the current inflation projections, there is further room for RBI to cut rates and boost the economy.
Honey Katiyal, Founder and CEO, Investors clinic said, “Cutting the repo rate by 35 basis points to 5.45% is definitely a benchmark decision by the Reserve Bank of India. In fact, it has now come down to the lowest from what it was in April 2010. This cut which is for the fourth time in a row is definitely a welcome move for the complete Indian Real Estate Sector. The lower interest rates will boost sentiments of all those buyers who are looking to invest in their first home. At the same, time, this will further increase the demand in the housing sector, which will lead to a boost in the sales volume of residential projects. The move will also help those developers and builders who are working hard to achieve their sales target. This 'accommodative' stance by the RBI is going to add momentum to the liquidity hit property market with booming sales and profits.”
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Mustafa Nadeem, CEO, Epic Research said, "This is a welcome move and was pretty much expected on the street. Amid global markets witnessing lower interest rate scenario and dovish policy stands, equities market taking a hit and negative-yielding bonds surging. This is an accommodative stance we believe which RBI did clearly mention in its previous meet. The recent stance of the Fed by reducing the reserve rates and officially labeling China as Currency manipulator amid rising trade war tariffs is what have might be the issue on the table. The monsoon is slowly picking up while inflation remains under control. The headroom space was there and RBI is filling it."
Avneesh Sood, Director Eros Group said, “We welcome the decision of RBI to cut down the repo rate by 35 basis points to 5.4 percent; since easing the interest rate will help revive the investment cycle, especially in Real-Estate sector which is what the govt wants under its Housing for All policy. As The Indian Economy needs liquidity as fuel to power the growth engine, the recent move by RBI is expected to lift industry sentiments and boost demand for the sector through greater consumption demand as well as private investments, which will not only culminate in more launches in real estate sector, but more importantly timely project completions as well."
Elaborating upon the benefits to the real estate sector post-RBI repo rate cut Farshid Cooper, MD, Spenta Corporation said, "The fourth straight cut in the Repo rate by 35bps addresses growth concerns by boosting demand in private investment while remaining steady with the inflation directive. In order to curb the ongoing NBFC crisis, RBI has further prioritized the housing sector lending to INR 20 lakh from INR 10 lakh per borrower. This move will surely help in uplifting the sector which has been going through a slowdown. Additionally, the rate cut has sent a strong indicator to domestic banks to cut lending rates before the festive season kicks off which might prove to be beneficial to the sector."