RBI Policy: Surprised with the stance; market to move sideways, say experts

The Reserve Bank of India (RBI) in its policy statement on Wednesday changed its stance from accommodative to neutral for targeting inflation. The central bank Monetary Policy Committee kept key repo rate unchanged at 6.25 percent.Expressing surprise over RBI's stance, Ajay Srivastava, CEO, Dimensions Corporate Financial Services, said in the backdrop of low GDP growth, one would have liked to see the economy being propelled rather than focusing on inflation.Therefore, with this policy, the stance on leveraged companies will change as the benefit of interest rate cost is going to be lower in the next year or so, he added.From a banking perspective, Srivastava rated the policy as positive to stable as bankshave surplus liquidity. For the industrials, he said it is negative because the interest rate cycle is at the bottom and it could go up going forward. Talking about market reaction which was quite muted, Ashwani Gujral of ashwanigujral.com said nobody in the market was long into the policy and consolidation in the market should continue. Playing with individual stocks is the way to go for next few sessions, Gujral said.He does not believe Nifty would breakout to fresh highs but may move sideways. On the downside levels of 8700-8720, and on the upside levels of 8800-8820 could be seen. On Bank Nifty Futures the range would be 20050 to 20500, said Gujral.On earnings, Srivastava said, PSU space was better than expected and for consumer discretionary space although this quarter was not as bad but do not read too much into them. It is better to go short in them or sell off, at least don’t buy them, he adds.For the full interview, watch video..