The Hindu Business Line : Repo rate hike: Analysts expect market to open weak today

Mumbai, June 11 Equities, already reeling under crude oil and inflation related pressure, would have to brace for more negative news, when the markets open on Thursday. On Wednesday evening, the RBI raised the short-term lending rate or repo rate by 25 basis points to 8 per cent.

However, some marketmen said the impact would be limited, as the markets had already factored in such a development. Mr Dinesh Thakkar, CMD, Angel Broking, said: “It (the repo hike) won’t have that much impact on the market, since it was expected and the stock prices had already adjusted to it.”

Lending money

“RBI’s step is positive as far as containing inflation goes; but, it will also have a negative impact in terms of higher interest rates, and one doesn’t know where to find the balance,” said Ms Deena A. Mehta, Managing Director, Asit C Mehta Investment Intermediates Ltd.

“The equity markets are likely to suffer some negative impact,” said Ms Mehta. After the repo rate hike, now the public and private sector banks may raise the interest rate at which they lend money to borrowers.

The interest-sensitive banking, realty and auto stocks have already witnessed huge pressure in the recent past, which is likely to continue now as there appears to be little possibility of interest rates coming down in the near future, said analysts.

The hike in the lending rate by the RBI is a measure to check inflation, which has been hovering at over 8 per cent the past few weeks.

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