Views of Mr. Dinesh Thakkar (CMD- Angel Broking) on Third Bi-Monthly Monetary Policy

Views of Mr. Dinesh Thakkar (Chairman & Managing Director, Angel Broking) on Third Bi-Monthly Monetary Policy:

"The status quo maintained by the RBI in terms of key policy rates was on expected lines. The RBI has however stated that it would continue to maintain accommodative policy stance in the coming months on expectations of moderation in inflation. The RBI reduced its inflation forecast for Q4FY2016 downwards by 0.2%.

The cumulative monsoon rainfall so far has been near normal. Also higher reservoir positions bode well for the Kharif sowing which has increased by 8.7% compared to the year ago period. These developments along with the contingency food management by the government are expected to check any shock to food inflation due to adverse weather conditions. In addition, the low increase in MSP and rural wages, modest global commodity as well as crude oil prices and still weak domestic demand conditions are expected to check inflationary pressures in the coming months. In our view, the CPI would remain modest at 5.5% in the last quarter of FY16. With the CPI falling within the RBI's target range, we believe that there could be around 50 bps reduction in the policy rates in the second half of the current fiscal."

Source : Equity Bulls

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