Stock market investors and observers are eagerly awaiting for the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) meeting, which is scheduled from 6th to 8th June 2023. Amid US Fed's rate hike jitters aiding US dollar to climb and sustain at two months high, the RBI MPC meeting outcome would be highly important for both FIIs and DIIs as it would give more clear picture about the Indian economy in medium to long term perspective.
Stock market investors and observers are eagerly awaiting for the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) meeting, which is scheduled from 6th to 8th June 2023. Amid US Fed's rate hike jitters aiding US dollar to climb and sustain at two months high, the RBI MPC meeting outcome would be highly important for both FIIs and DIIs as it would give more clear picture about the Indian economy in medium to long term perspective.
According to stock market experts, Indian economy is looking in good shape after better-then-expected Q4FY23 gross domestic product (GDP) data and strong GST collections. They said that Indian government has managed to keep inflation under control and hence Indian stock market is currently placed in 'sweet spot' among other global markets. They went on to add that in such a conducive milieu for DII and FIIs, RBI won't behave like a devil and expected status quo in rate hike. However, they went on to add that any hint about rate cut in near term may boomerang Indian stocks, especially, manufacturing and financial segment.
What market expects from RBI MPC meeting
On stock portfolio tweaks that an investor can take ahead of the RBI MPC meeting outcome, Sandeep Pandey, Director at Basav Capital said, "Amid fear of economic recession in developed nations like US and European countries, Indian economy has dropped no sign of any weakness in last few quarters. In fact, it has gained from strength to strength in last few quarters. Recent better-than-expected GDP numbers, strong GST collections and national inflation at its lowest levels (as claimed by the Union Finance Minister Nirmala Sitharaman in Mumbai last week), Indian stock market is positioned in sweet spot and both DII and FIIs are buying in bulk, which has fueled majority of the Indian indices at record high, which includes Bank Nifty, small-cap and mid-cap index."
Former Deputy Vice President of HDFC Bank went on to add that credit growth of the bank has also grown during recent quarters, which was visible in recent Q4 results of various leading banks as well. So, RBI may maintain status quo in interest rates and may drop some hint about the interest rate cut regime in near term.
Stock portfolio tweak
On how stock market will react if there is any interest rate cut hint from the RBI in upcoming MPC meeting, Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal said, "FIIs are awaiting final outcome of the RBI MPC meeting as US dollar has surged to record two month high after the uncertainty on US Fed rate hike after the better-than-expected Non-Farm Payrolls (NFP) report in the US. Any hint of interest rate cut in future may lead to bulk buying by both DIIs and FIIs and we may witness a fresh boomerang on Dalal Street." However, Motilal Oswal expert maintained that market has already discounted the outcome of status quo on interest rate from the upcoming RBI MPC meeting.
On expected outcome from the RBI policy meeting, Mahesh Agarwal , National Head - Wealth at AUM Capital Market said, "We expect the MPC to maintain the current rates and the overall outlook appears to be stable. The market will respond favorably, and the 10-year yield is predicted to reach a low of 6.90/92 with more softening expectations in short-term yields."
Stocks to buy today
On stock portfolio tweaks that may help an investor garnet better returns in near term, Chandan Taparia of Motilal Oswal said, "Auto and financial sector may surge if the RBI MPC meeting outcome is on the lines of market expectations." He advised investors to buy Mahindra & Mahindra, Maruti and IDFC First Bank shares ahead of the RBI MPC meeting as these stocks may rise after the RBI policy meeting.
On changes in stock portfolio that may help an investor to generate alpha return in next two to three years, Sandeep Pandey of Basav Capital said, "One should book profit in leading Bank Nifty stocks and switch money towards manufacturing and IT segment. One can look at Tata Motors, M&M and Maruti Suzuki India in auto manufacturing segment, Polycab in FEMG segment, Deepak Nitrite in chemical manufacturing segment whereas Cummins India can be other good stock to buy for next two to three years time horizon."
IT stock in focus
On IT stocks to buy in the wake of RBI MPC meeting, Sandeep Pandey said, "TCS share price may give sharp upside movement as the company is sitting on a high cash reserve and in rate pause regime, its cost of funding is expected to come down dramatically. But, one should have two to three years time horizon while buying this IT major and keep on accumulating on every 5-6 per cent dip."