With the RBI having effected .25 bps, there has been a sigh of much awaited relief for the market man and industry (both). In other words, it implies that bank shall have to lend the loan to the prospective borrowers at lesser rate than whats they earlier charged. In fact, some of the leading banks have started announced the lower rate of interest in so far as EMIs for home loan is concerned. Other banks are likely to follow the suit.
Ultimately, the writ of government has prevailed. What it could not do during the currency of Mr Rajan has been do post his retirement. Mr Rajan wanted to tame the inflation and he did succeed in his attempts ; no doubt. Perhaps, lately with the constitutions of five member committee, it felt that inflation shall be tamed hence rate cut. Let us see how far our RBI/government is correct in its reckoning.
Yes, with this development, no doubt, interest sensitive sectors mainly, auto / auto ancillary, housing, NBFC, Banking n infra are likely to benefit from the latest move. Even industry which had been appealing to the government to reduce the rate should be happy with this money. Manufacturing may be at the faster pace, demand shall shore up. It has also to be seen in the light of the fact that
1. 7th Pay Commission benefits are released (central govt employees and retirees) money shall make its way in the market - consumer goods n auto.
2. Good monsoon (though somewhat below expectations of 107%) is likely to add to the pocket of both rural and urban folk. Again it dawns well for the industry/market.
3. Q4 results of India Inc on the anvil, hopefully we should be confident of the market not correcting that very soon. Yes, post festival season, we may may confronted with such a situation. Even otherwise, any correction in the market is good for us as it provides good opportunity to buy again at lower levels.
Till there is some good news, let us be happy with what we have/ have earned because of our very organised approach on healthy investment.
God bless and be happy (wherever you are).