Why RBI should keep its powder dry with economy in deep freeze

NEW DELHI: Domestic equity market ended higher for the second week straight, however, the dismal GDP print, which came on Friday might play some spoilsport going ahead. While some analysts and economists say this was along the expected lines and growth has bottomed out, others don't necessarily agree.“The stock market has been trending lower in the last couple of trading sessions in anticipation of poor numbers. While there may be a mild negative reaction on Monday, it will not change the medium term trajectory for equities. For FY20, our real GDP forecast stands at 5.2 per cent, with risks to further downside. After 135 basis rate cut delivered by RBI since February, we expect the central bank to cut rates by an additional 25 bps in December, taking the repo rate to 4.90 per cent. Going forward, we believe fiscal policy will need to play a dominant role in supporting overall growth. The government may choose to mildly deviate from its fiscal deficit target for this year as well as next fiscal,” said Amar Ambani, Senior President & Research Head, YES Securities.Sandip Sabharwal of asksandipsabharwal.com called the economy to be in deep freeze following poor core sector data. The GDP print of the 2nd quarter was expected to be bad. However Core Sector data of October released yesterday is… https://t.co/suxKrp5ZM4— sandip sabharwal (@sandipsabharwal) 1575085166000 He also made a case for RBI to not cut the rates, saying with the inflationary pressure still high, the central bank should keep its powder dry for cuts in the future. There is no major case for a rate cut by the #MPC next week. Inflationary pressures are greater than the last meeti… https://t.co/38JtdzRGXY— sandip sabharwal (@sandipsabharwal) 1575013676000 Shankar Sharma shares Sabharwal's views that Indian GDP is down in the dumps. My 2 cents on India's GDP data::a)Adjusting for the extra 2% bump up in growth from old series to new series, India… https://t.co/2T4ZsPm3Bb— Shankar Sharma (@1shankarsharma) 1575096739000 Talking about what could revive economic growth, Nilesh Shah, MD, Kotak AMC shared his two cents. Like food is necessary for human growth, Credit is necessary for economic growth. YTD Bank Credit Growth is Rs 75,7… https://t.co/YpGoFwz9Bm— Nilesh Shah (@NileshShah68) 1575121347000 However, value investor Safir Anand was hopeful of an economic revival. Idfc first bank says pick up in gdp in second half. Says festive season not bad, currency in circulation has increa… https://t.co/mPScmdywC2— Safir (@safiranand) 1574916380000 Moving to market...Like his views on economy, Sabharwal is not confident of a market rally either and asked investors to be cautious. Here's why: Many Investors and Analysts start getting comfortable with the markets whenever Volatility Collapses However when… https://t.co/fUf7kjb80n— sandip sabharwal (@sandipsabharwal) 1575115920000 But, PMS fund manager Basant Maheshwari had the opposite view. He believes the market rally will go on for long.https://twitter.com/BMTheEquityDesk/status/1199579768217206784 And lastly, YES Bank...Sabharwal looks unimpressed with the lenders' suitors! I must say The @YESBANK management has been able to get together a very "Weird" and "Motley" group of potential inv… https://t.co/yAalgAPiMx— sandip sabharwal (@sandipsabharwal) 1575094609000

from Economic Times https://ift.tt/2r0TGjm