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CRR hike, higher inflation not to impact market, say experts

Last Updated: Sunday, January 31, 2010 - 12:12

Mumbai: The
cash reserve ratio (CRR) hike and a higher inflation forecast by the Reserve
Bank will not have much impact on the stock market as both have already been factored
in by market participants, experts said.

"The 0.75 percent hike in CRR will not impact the market much though the
industry anticipated at most a 0.50 percent hike," Angel Broking's
Managing Director, Dinesh Thakkar, told a news agency here.

An interest
rate hike was also not imminent as "banks have a lot of money and there is
sufficient liquidity available in the system," he said.

Last Friday, the Reserve Bank had hiked CRR by 0.75 percent to 5.75 percent
while pegging inflation at 8.5 percent by end-March.

with this view, Edelweiss' Institutional Equities Co-Head, Vikas Khemani, said
that lowering of the credit growth forecast would also not impact the market.

"Capacity utilisation is picking up along with industrial confidence. By
the next quarter, we can expect a better credit growth forecast," he said.

The forecasted credit growth is anyway as per the market expectation, Thakkar

credit growth is sluggish at 11-12 per cent. The market will be happy if it
reaches 16-17 per cent as it means a GDP growth at 7.5 per cent levels. So it
should not impact the market," he said.


First Published: Sunday, January 31, 2010 - 12:12
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