Monetary policy announcement seen as neutral from market perspective

New Delhi, Oct 6

Completely in line with expectations, the monetary policy is neutral from the market perspective, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Not only the policy rates but the growth and inflation targets for FY24 remain unchanged. More than this status-quo statement from the MPC, tonight’s job numbers from the US will determine the market trend in the near-term, he said.

Rate sensitives like banks will start discounting the positive Q2 results expected in the coming days.

The warning from the governor that the central bank will resort to OMOs to absorb excess liquidity if necessary has pushed the 10-year bond yields up marginally, he said.

Elevated interest rates for an extended period will have an implication on rate-sensitive sectors like banking, auto, core industries, and heavy-weighted balance sheet companies, says Vinod Nair, Head of Research at Geojit Financial Services.

The elevated global bond yields and appreciation of the US dollar will affect the domestic economy and capital flows. However, it should not have a deep overhang effect on the economy but rather a mixed bias in the short term, he said.

The inclusion of government securities in the global bond index and moderation in inflation, like food and international commodity prices, will support INR and domestic corporate profit even in a volatile global currency market, he said.

BSE Sensex is up 327 points at 65,959 points on Friday. Bajaj Finserv is up more than 3 per cent.