RBI policy has done everything in its power - Mr. Amar Ambani, Senior President and Head of Research, YES Securities

"The RBI policy has done everything in its power to help the Indian economy fight the slowdown, emanating from the Covid-19 crisis. The Central bank has effectively cut rates in the system by over 100 basis points, if one were to consider the combined benefit of the repo cut, sharp reverse repo cut, easing of CRR requirement, reduced need of daily CRR balance and MSF facility. This potent combination will result in immediate monetary transmission of these measures. While new demand for credit will likely remain tepid, this offers a large sentiment boost, at the very least. Existing borrowers certainly get a big relief in the form of moratorium in term loans and their working capital payments. The Central bank also announced LTROs and banks are to use the proceeds, to participate in the corporate bond market, thus helping ease liquidity and lowering yields. All-in-all, the liquidity injected in the system would be to the tune of $50bn. Among other steps, banks are now being allowed to participate in NDF market, a long-standing demand, that will help tide over the currency volatility somewhat. The most important statement in the policy speech, was the assurance that the RBI will remain vigilant and do whatever is necessary, in future as well, to revive growth. Full marks to the RBI Governor for these commendable and decisive steps. While the stock market erased its gains post the policy announcement, I would imagine that expectations were already built-in, over the past 3 days; and I would view the slide as profit booking and not a negative reaction to the measures announced."

Source : Equity Bulls

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