Have expectations of a 25 bps rate cut buoyed rate-sensitive stocks?
The consensus on the Street seems to be that unless there is a surprise rate cut of over 25 bps or more dovish guidance, rate sensitive sectors may not outperform
Everybody expects the Reserve Bank of India (RBI) to cut its policy rate by 25 basis points (bps) on Tuesday. The reasons are that recent inflation data was lower than expected; Consumer Price Index-based inflation is expected to be below RBI’s projections; and the stage was cleared for a rate cut after the US Federal Reserve decided to maintain status quo on interest rates during the last policy meeting. That should have resulted in the rate-sensitive sectors outperforming, as they would be buoyed by hopes of a rate cut. One basis point is one-hundredth of a percentage point.
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