Focus should remain on alpha than beta: JP Morgan

Bharat Iyer, JP Morgan said the equity markets went into the event with limited expectations; consequently the disappointment was muted.

In terms of sector stance, he maintained the focus should remain on alpha, rather than beta. “We would position for a potential recovery in the local economy through high quality financials with a strong capital & liability franchise & manufacturing sectors with low financial leverage & high operating leverage - commercial vehicles & cement are key picks here,” he explained.

Separately he remained overweight IT services and healthcare, he said, adding the demand environment remains solid. He believes concerns on INR appreciation turning into a headwind are over done.

Meanwhile, Rohini Malkani, Citi said in line with expectations, the RBI left policy rates unchanged largely due to lack of transmission of past cuts in banks' lending rates and limited incremental data post the March rate cut.

The RBI's macro forecasts are GDP growth at 7.8 percent in FY16 and CPI inflation moderating to 4 percent by August 2015 but firming up to 5.8 percent by March 2016.

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Bharat Iyer

Head - Research|JP Morgan

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Going forward, she expects banks to lower lending rates on the back of easier liquidity conditions, subdued credit demand and moral suasion by policy stake holders. “As regards policy rates, given our expectations of inflation averaging 5 percent and real rates in the 150-200 bps range, we maintain our view of a further 50 bps cut in FY16,” Malkani said.