Mkts to react –ve to RBI rate hike move on Monday: Experts
Published on Fri, Mar 19, 2010 at 23:04 | Source : CNBC-TV18
Updated at Sat, Mar 20, 2010 at 00:38
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Mkts to react –ve to RBI rate hike move on Monday: Experts
The Reserve Bank has raised its short-term borrowing and lending rates by 25 basis points each. what impact would the rate hike have on stock and bond markets on Monday?
Hemant Mishr, MD-Global Markets, Standard Chartered Bank, sees a knee jerk reaction of 5-10 basis points in the bond markets. "The bond markets would be surprised by the sudden move. A section of the market was expecting a rate hike of 50 bps in April. In the short-term, the benchmark yields could go higher possibly by 10-15 bps or so." He expects the 10-year bond to hit 7.9%-7.95% on Monday.
RV Shridhar, Head Markets at Axis Bank, said bond yields would inch closer to 8% on Monday. He feels the markets will now keenly watch the policy review for another hike."
However, SA Bhat, CMD, Indian Overseas Bank, is not that perturbed. He said bond markets have already factored in the move. "This is a step in the right direction taken by RBI to fight inflation. If inflation comes down and they are able to contain it, to that extent the yields should also come down."
Hemant Mishr, MD-Global Markets, Standard Chartered Bank, sees a knee jerk reaction of 5-10 basis points in the bond markets. "The bond markets would be surprised by the sudden move. A section of the market was expecting a rate hike of 50 bps in April. In the short-term, the benchmark yields could go higher possibly by 10-15 bps or so." He expects the 10-year bond to hit 7.9%-7.95% on Monday.
RV Shridhar, Head Markets at Axis Bank, said bond yields would inch closer to 8% on Monday. He feels the markets will now keenly watch the policy review for another hike."
However, SA Bhat, CMD, Indian Overseas Bank, is not that perturbed. He said bond markets have already factored in the move. "This is a step in the right direction taken by RBI to fight inflation. If inflation comes down and they are able to contain it, to that extent the yields should also come down."
