RBI set for first rate hike in 4 years: How is Nifty going to play this?
The RBI is highly likely to bump the repo rate by 25 basis points to 5.50% today. Honestly, with inflation hovering near 5% and oil sitting comfortably around $100, the market has already digested this hike. The actual volatility is going to come from the commentary.
If the Governor keeps it light and suggests this is just a one off pre eemptive move to steady the rupee, Nifty should see a decent relief rally as the uncertainty clears out. On the flip side, if they sound spooked about the weak monsoon or structural oil shocks and hint at a prolonged hiking cycle, expect rate-sensitives like Bank Nifty, autos, and realty to take a massive beating.
Are you guys buying the dip on defensives like IT and pharma, or just sitting on cash until the dust settles? Let me know your plays.