Aditya Birla Sun Life Mutual Fund

Key Highlights of the Fifth Bi-monthly Monetary Policy Statement, 2018-19, Reserve Bank of India

Dec 07, 2018
5 mins | Views 864

Key Highlights of the Policy Statement

  • Repo Rate – unchanged at 6.50%
  • Reverse Repo Rate – unchanged at 6.25%
  • Bank Rate & Marginal Standing Facility (MSF) Rate – unchanged at 6.75%
  • Cash Reserve Ratio – unchanged at 4.0%
  • Statutory Liquidity Ratio (SLR) to be reduced by 25bps every calendar quarter commencing January’19 until the SLR reaches 18% of NDTL

In a widely expected decision, RBI kept both the policy repo rate and stance unchanged and “calibrated tightening”, respectively.

Sharp decline in inflation forecast with 1HFY20 inflation projected at 3.8-4.2%, compared to 4.8% projection in 1QFY20 in the last policy.

GDP growth estimate for FY19 retained at 7.4% and GDP growth for H1FY20 estimated at 7.5% but with risks on the downside.

Key downside risks to growth - Lower Rabi sowing, financial market volatility, slowing global demand & rising trade tensions.

On positive side, factors like decline in crude prices, increasing capacity utilisation, acceleration in investment activity & rising credit offtake augurs well for growth prospects.

Outlook

Going ahead, RBI’s stance may change provided that they see persistency in positive data points. There is inclination to support the market on liquidity front and also its willingness to be lender of last resort if situation so warrants

Investors who wish to invest for shorter tenures may consider low duration fund or short term fund like Aditya Birla Sun Life Short Term Opportunities Fund (An open ended short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1-3 years). The investors may also take exposure to our credit portfolios like Aditya Birla Sun Life Credit Risk Fund (An open ended debt scheme predominantly investing in AA and below rated corporate bonds) & Aditya Birla Sun Life Medium Term Plan (An open ended medium term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3-4 years).

Aditya Birla Sun Life AMC Ltd /Aditya Birla Sun Life Mutual Fund is not guaranteeing / offering / communicating any indicative yield / returns on investments

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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