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Experts’ Recommendation: 5 Shares to Purchase after RBI MPC Meeting

Submitted by admin on April 10th, 2024

If you are planning for stock investment, here are five recommendations from experts – Bajaj Finance, HDFC Bank, Poonawalla Fincorp, IRFC, and SBI.

Stocks to Purchase after RBI Monetary Policy

The Central Bank has not touched the repo rate and it’s currently standing at 6.50 percent after the 7th straight MPC (Monetary Policy Committee) meeting. However, stock market pundits think this RBI move is a good opportunity for the investors with long-term planning to purchase banking and other financial stocks. According to these experts, static repo rate means money to lenders is not cheaper, which will result in some stock corrections.

However, experts maintain that the Indian economy is intimately connected to global merchandise. They inform that the US Fed has announced three rate cuts till date. Hence, the RBI seemed to be looking forward to the first US Fed rate cut in 2024 for more transparency on the rate cut timeline. Experts suggest medium-to-long-time investors to consider accumulating or adding the five banking and financial stocks. These are:

• Bajaj Finance
• HDFC Bank
• Poonawalla Fincorp
• IRFC
• State Bank of India

Effect of RBI Monetary Policy on the Stock Market  

Ani Rego, Founder, and Fund Manager at Right Horizons, said when explaining the RBI monetary policy effect on the stock market, “We believe markets in the near term will now be driven by the upcoming earnings season and the 2024 elections. Investors are bullish as they are favoring rate cuts in 2024 which will unanimously boost the equity markets. The banking sector is the most sensitive to changes in rate cycles and has been a major reason for incremental earnings in FY23 and in H1 of FY24 benefitting from the hikes and credit growth being robust and persistent.”

According to him, prolonged rate cuts will cause NIM to narrow However, he admits that the experts expected rate cuts to start in the last quarter, and therefore, the trend in the banking sector will probably continue in the current financial year. NBFC will likely get most benefits from rate cuts as banks will follow improved credit growth. In addition, credit-sensitive sectors such as real estate and auto industry will experience higher demand.

“From a stock market perspective, the announcements are likely to influence investor sentiment and market dynamics. The acknowledgment of surplus liquidity and the RBI’s liquidity management efforts may lead to a positive reaction in the stock market, particularly among banking stocks. Any indication of accommodative monetary policy measures could further bolster investor confidence, potentially driving upward momentum in the stock market, added Sonam Srivastava, Founder and Fund Manager at Wright Research.

However, he expresses concerns that inflation and worldwide economic risks may temper market gains. Banking sectors can stand to gain from the RBI’s strong focus on liquidity management.

RBI Monetary Policy: Experts’ Recommendations on Stock Purchase 

Sandeep Pandey, Founder of Basav Capital, advocates for investing in the banking and financial sector, shares that after the RBI monetary policy meeting, “RBI leaving repo rate unchanged means no extra liquidity to the Indian lenders, which may trigger some downside pressure in the banking and financial stocks. I believe the Indian central bank is waiting for the first rate cut announcement from the US Federal Reserve for more clarity on global inflation:, he said.

However, he added that the US Fed’s three rate cuts in 2024 are likely to influence RBI’s decision regarding interest rates as well. Therefore, he advises investors to look at the financial stocks and the quality banking in case any correction is done in such stocks.

When asked about the shares suitable for investment after the RBI monetary policy meeting, the Basav Capital founder and former Deputy Vice President of HDFC Bank suggested five banking and financial stocks that investors should think about buying or adding the – Bajaj Finance, HDFC Bank, Poonawalla Fincorp, IRFC and SBI.