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http://www.kotaksecurities.com/pdf/indiadaily/indiadaily12032012.pdf
Economy
Monetary Policy
Well-timed and nice surprise. The RBI, in a bid to inject liquidity ahead of the advance
tax outflow, cut the CRR by 75 bps to 4.75%. The surprise was more on the timing
rather than the direction. We (along with consensus) were expecting a CRR cut of 50
bps in the March 15 policy meeting. The move is clearly preemptive as the RBI injected
~Rs480 bn of primary liquidity keeping in mind the liquidity scenario in the next
fortnight. The March 15 policy meeting could now turn out to be a non-event with RBI
holding back any cuts to the repo rate before it sees a more sustained drop in the
headline WPI inflation and consolidation on the fiscal side.
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