The RBI continued the process of normalizing the conduct of monetary policy with a 25bps reduction in the MSF while simultaneously hiking the repo rate by 25bps to 7.75%. The RBI also announced additional access under term repo for a cumulative availability of funds to the extent of 0.5% NDTL. With the additional access under term repo which amounts to Rs 40,000 crores, over and above the 1% of NDTL access under overnight repo and Export credit refinance, the recourse to funding under MSF may gradually reduce.
In simple term, going forward park your resources in liquid fund & monitor inflation closely… once its come down in comfort zone say in next couple of month … move into equity fund with long term view or into accrual based Short term debt fund with time horizon of at-least 12-15 months to reward yourself with annualized post tax returns around 10%.
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