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IDBI Capital Report
In line with expectations, the Monetary Policy Committee continued to retain policy repo rate at 6.5%, with a ‘neutral' stance. However, the committee reduced the cash reserve ratio by 50 basis points, which would release primary liquidity of Rs 1.16 lakh crore in the banking system.
Among our banking coverage universe, the positive impact on NIM due to CRR cut will be ~2-3 bps.
The standing deposit facility rate remained unchanged at 6.25% along with marginal standing facility rate and the bank rate at 6.75%. The FY25 GDP growth forecast was revised downwards sharply to 6.6% from 7.22% projected earlier.
Inflation level for FY25 was revised upwards by 30 bps from earlier projections to 4.8% currently. However, economic activity is set to improve along with rising business and consumer sentiments, as reflected in RBI's surveys.
Our top picks are City Union Bank and ICICI Bank.
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