RBI cuts repo rate by another 50 basis points and CRR by 100 basis points

It is a timely move that RBI did finally by reducing the repo rates by 50basis points and cut with CRR by 100 basis points effectively bring additional liquidity to the system by another Rs85000crore. 

As the major impact was to real estate sector already the major real estate companies like Parsvanth developers have very openly sought that we don't require any bailout package from the government as they  did for the aviation sector(extending credit terms) but we require only policy change like a steep cut in CRR and Repo rate cut to 5.5%.Also he had indicated that his organization will identify 15% of the non performers and retrench them which is inevitable.

The worst hit sector was real estate sector and the big players started feeling the heat and openly accepted the crisis in terms of liquidity.This move by the government would definitely boost the sentiments in the real estate sector.Inspite of the banks move on increasing the margin money for the Home loan from 20-25% and to maximum of 40% will not cause much impact.The good news is  for the consumer in the personal,carloan and home loan segment could see the real benefit in the coming months.

Investing in stocks would be an attractive option, as the deposit interest will also come down in the future.It is a positive cue and definitely boost the sentiments of the stock market in the coming months.

Thanks to recession as the figure sequentially started falling down on the fourth week of October as the global commodity prices also falling down then it is a positive sign for the Indian economy.

The only one left out is the correction of the fuel prices ,there might be certain factors petroleum ministry might look into .One is the OPEC countries stopped producing 1.5 million barrels a day from November first onwards.Already crude price is highly fluctuating and impact on the decision of OPEC will reflect after one or 2 months.Moreover average price for  the inventory built up over months is also a concern.

Though the crude price rules around $67 a barrel the oil marketing companies are still making a loss and the government is sharing the loss by way of subsidy.

Even then only pending action  from the government is the reduction of the Petrol and diesel price.Once it is through we can see the substantial impact in the inflation index. Then it would definitely vouch the Indian economy is stronger.