Liquidity: Likely to tighten in India - by Jewwhii41
The Indian market may face tight liquidity following the first tranche of the cash reserve ratio (CRR) hike by the Reserve Bank of India (RBI) coming into effect.
RBI hiked CRR by 50 basis points on April 17 in two tranches by 25 basis points each on April 26 and May 12. CRR is the portion of deposits mobilised by banks that is kept with RBI as a statutory requirement every fortnight on Friday.
Even if liquidity is surplus, market players will be cautious as the central bank is trying its best to tighten funds in the system for fighting inflation.
The capital inflow has taken a backseat for the time being.In this backdrop, the system will witness an inflow of around Rs 14,253 crore as against an outflow of Rs 12,250 crore. The outflow includes the first tranche of CRR hike.