"The RBI's monetary policy Committee (MPC) has kept the rates on hold as the Committee voted 5 to 1 in favour of status quo in its meet Wednesday. What this means is that RBI has kept its Repo rate unchanged at 6% signaling the fact that inflation is manageable even though not comforting and under control. Also growth projections have been lowered marginally.

Ritesh Ashar, CSO, KIFS, said, ''This leaves little room for banks to reduce interest rates further and investors would do well to hold a mix in their bond portfolios a mix of short, medium and long-term maturities in these uncertain times to avoid negative surprises. The banking sector would not be happy with this even though the hawkish stance is on expected lines considering the increase in inflation.

The budget seems to have played a part here as the hike in minimum support price to farmers is expected to give rise to food inflation. The rise in crude oil prices in recent times has also flagged inflation concerns which may have also prompted RBI's MPC to pause the lowering of inflation rates. The impact on banking stocks would not be much as investors and analysts had predicted the same."

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