Economy Update - Rates Unchanged, On-hold stance may extend longer - Emkay

- Status-quo maintained with policy rates left unchanged. SLR reduction does not mean much in terms of monetary easing as banks are already holding excess SLR securities

- FY13 GDP growth has been lowered to 6.5%; WPI Inflation projection revised upwards to 7%, reflecting a stagflationary environment

- Deficient monsoon, adverse global growth and dismal IIP hint for further downward revision in RBI's GDP projection. We see 50bp downside risk to our FY13 GDP growth at 6.0%.

- Inflation concerns outweigh growth risks. High Inflation amid persistent structural imbalances limits scope for rate cuts. At best RBI will keep OMO purchase window open.

Source : Equity Bulls

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