Tuesday 15 July 2008

RBI to Review Monitory Policy on January 25th


The rate sensitive sector stocks – banking, real estate and automobiles are in limelight on the bourses a day ahead of the Reserve Bank of India (RBI) monetary policy review tomorrow, January 25. Most analysts are expecting a 25 basis points (bps) rate hike in both the policy rates—repo and reverse repo. This will take the repo rate, or the rate at which RBI infuses liquidity into the system, to 6.5%, and the reverse repo, or the rate at which the central bank drains liquidity, to 5.5%. One basis point is one-hundredth of a percentage point.
The banking shares have now rallied for six consecutive day after the food inflation fell the second week in a row to 15.52% for the week ended January 8, according to the official data released today. Food inflation, having touched 18.32% for the week ended December 25, had declined to 16.91% on January 1. The BSE, banking index, Bankex the second largest gainer among sectoral indices today, has appreciated almost 6% as compared with less than 2% rise in the benchmark index Sensex in the last six days.