InvestorQ : Why did the Sensex react so positively to the monetary policy on 06 August when rates were not cut?
Niti Shenoi made post

Why did the Sensex react so positively to the monetary policy on 06 August when rates were not cut?

Answer
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diksha shah answered.
1 month ago


You are right that the Sensex rallied by 362 points despite the RBI not offering the much expected rate cut of 25 basis points. Here were the positives markets saw in the policy.

· Rate cut expectations had tapered due to high inflation. Hence the negative impact of the status quo was limited.

· There were lot of critical announcements outside the basic rate cut story, which could be accretive for specific stocks.

· RBI allowed one-time restructuring of loans given to businesses during the current fiscal without impacting credit standing and borrowing power.

· RBI has also permitted personal loans to be restructured once during the current fiscal without impact on credit ratings, which could taper the NPA risk.

· RBI has given a boost to the start-up environment by expanding the definition of priority lending to include start-ups also in the classification.

· RBI announced an enhanced special liquidity facility by Rs.10,000 crore split equally between housing sector and agriculture.

· Above all, the LTV or the loan to value ratio for gold loans was hiked from 75% to 90%. Now households can monetize gold more effectively an gives a boost to lenders too.