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To Cut or Not to Cut? RBI's Interest Rate Dilemma
Wed, 8 Feb Pre-Open

Today's the day. All eyes in the Indian stock markets are trained on the Reserve Bank of India's (RBI) bi-monthly monetary policy review.

Because banks are flush with post-demonetisation funds, and rising crude oil prices are set to fuel inflation, many believe the RBI will keep its key interest rates unchanged.

But with the services sector contracting for the third straight month in January, some still hope that the RBI will slash the policy rate. And with the government pegging the fiscal deficit target for FY18 at 3.2% of GDP, there's room for the RBI to accommodate this.

With these and a whole host of other global and domestic factors to consider...it's hard to predict what the RBI will do.

But as usual, we recommend that you, the intelligent investor, avert your eyes from this drama and keep them focused on the value and comfort of the safest stocks. Because, as you know, neither rate hikes, nor cuts, impact our long-term view on stocks.

After all, rate cut alone will not speed up the economic slowdown caused by demonetization-led cash shortage, and consumption reduction. To set the paralyzed demand into motion, way more action needs to be taken.

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