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RBI Monetary Policy Review June 2013
RBI Monetary Policy Review June 2013
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RBI Monetary Policy Review June 2013

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  • 1. RBI announced the Mid Quarter Monetary policy review today.Policy actions undertaken are as follows: Repo Rate kept unchanged at 7.25% Reverse repo kept unchanged at 6.25% Margin Stabilization Facility (MSF) kept unchanged at 8.25% CRR kept unchanged at 4%. SLR left unchanged at 23%RBI has kept rates unchanged in this review. RBI has acknowledged that ‘easing commodity prices atthe global level and weaker pricing power of corporates at the domestic level are having a softeninginfluence.’ However, RBI is worried about the elevated food inflation as well as suppressed inflation inadministered diesel prices and minimum support prices (MSP) for food crops which can lead to uptickin WPI inflation in the months to come. The significant depreciation in rupee in last two months willalso lead to upward pressure on imported goods’ prices.GDP growth in the last two quarters has remained below 5%. Capital formation activity in thecountry remains muted with no sign of pick-up as yet. There has been a small uptick in consumerdurable sales which could indicate a gradual recovery in the consumption space. RBI soundsconcerned about falling growth especially noting that ‘global economic activity has slowed and risksremain elevated, most recently on account of uncertainty over policies of systemic central banks.’ Webelieve that going ahead the policy should be biased more towards growth with inflation showing aclear downward bias.Our Equity View: We expect RBI to carry out a 25bps cut in repo in the July policy on the back ofeasing WPI inflation. The liquidity condition also remains tight so a 25bps CRR cut is also possible.We expect a gradual macroeconomic recovery leading to better earnings growth compared to lastyear. In the short term, Market will focus on global cues & domestic political events..RBI Mid-Quarter Monetary Policy Review17thJune 2013
  • 2. Swapnil Pawar Varun Goel Yogesh HotwaniDisclaimerThe information and views presented here are prepared by Karvy Private Wealth or other Karvy Groupcompanies. The information contained herein is based on our analysis and upon sources that we considerreliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personalinformation and we are not responsible for any loss incurred based upon it.The investments discussed or recommended here may not be suitable for all investors. Investors must maketheir own investment decisions based on their specific investment objectives and financial position and usingsuch independent advice, as they believe necessary. While acting upon any information or analysis mentionedhere, investors may please note that neither Karvy nor any person connected with any associated companies ofKarvy accepts any liability arising from the use of this information and views mentioned here.The author, directors and other employees of Karvy and its affiliates may hold long or short positions in theabove-mentioned companies from time to time. Every employee of Karvy and its associated companies arerequired to disclose their individual stock holdings and details of trades, if any, that they undertake. The teamrendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares orother securities till such a time this recommendation has either been displayed or has been forwarded to clientsof Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd.The information given in this document on tax are for guidance only, and should not be construed as tax advice.Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicableto them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this couldchange the applicability and incidence of tax on investmentsKarvy Private Wealth (A division of Karvy Stock Broking Limited): Operates from within India and is subject toIndian regulations. Mumbai office Address: 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra(East), off Bandra Kurla Complex, Mumbai 400 051 (Registered office Address: Karvy Stock Broking Limited,“KARVY HOUSE”, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034) SEBI registrationNo’s:”NSE(CM):INB230770138, NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O):INF010770131,NCDEX(00236, NSE(CDS):INE230770138, NSDL – SEBI Registration No: IN-DP-NSDL-247-2005,CSDL-SEBI Registration No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512”

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