RBI rate cut in Reverse Repo rate by 0.25 bps to 5.75% and repo rate to 6.0% : Epic Research

Mr. Mustafa Nadeem, CEO, Epic Research for your consideration:

We welcome the RBI rate cut in Reverse repo rate by 0.25 bps to 5.75% and repo rate to 6.0% which was widely expected on the D street. RBI also slashed MSF to 6.25% as well. Since there was a level of comfort for RBI due to downward trending inflation, both tradeables and non-tradeables. Projections for inflation is kept at 4% and is expected to be at same level while concern over recent loan waiver by various government is flagged red in near term.

This was mostly discounted in prices where we have seen the recent run up in broader indices as well. Nifty inching from 10k to 10150 and bank nifty actually performed well as it gave a jump from 24500 to 25200.

We have seen positive built up in interest rate sensitive sectors like Automobile, banking, Reality and NBFC. So liquidity was already present for a while and with this boost we may see further momentum. We expect Reality stocks to pick some momentum while Private banks will do well due to their better return on deposits as compared to PSU banks. We maintain our buy on dips strategy with next Targets around 10400 - 10450 while we see fresh base for Nifty at 9950. Bank Nifty may set the tone towards 25800 while base is seen at 24800.

Source : Equity Bulls

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