This Policy was focused on one thing that was out loud in its recent meet and it was Liquidity. The RBI maintained the status quo on its crucial repo and reverse repo rates while the SLR is reduced to 18% VS 19.5%. A lot of factors were seen being accounted for in this policy by RBI which were a threat to RBI a few months back. In previous Meet, Crude, Rising dollar, higher Treasury yields, Inflation, and Currency were eyeballing the RBI. At present, RBI is at a very comfortable stage, comparatively with Crude being down to $50 mark and INR appreciating around 5%. The inflation will see the impact and is now projected at 3.8% to 4.2% in 1H2019 by RBI while in the range of 3% in the second half of 2019. The Liquidity, which was seen as a crunch, is now being addressed with adjustments in SLR. Hence this is a clear statement by the RBI that they will be addressing the liquidity issue through the system and not focused on the recent NBFC fiasco. Though, it was also important to note that governor clearly mentioned that there may be a change in its stance. Hence, a change in its rates going forward when needed.
Markets are at peace with this. There was no expectation from the street of any hike while lower crude prices, and appreciating INR has been discounted in the structure as of now. GDP projection in the range of 7.2% to 7.5% with lower inflation projection is positive of the investors and streets. This is culminating to be a prudent time for trending period ahead. It all now comes down to western markets and their events. We may see volatility giving the Dalal Street a short visit.