Should You Book Partial Profit Now?

The market tableau is replete with telltale signs, marked by numerous micro-cap and small-cap stocks that exhibit an exorbitance that seemingly outpaces their foundational underpinnings. Given this scenario, Bhavya Rathod discusses the merits and demerits of booking partial profit

- Bhavya Rathod

In its Monetary Policy Committee (MPC) meeting of the current fiscal year (FY24), the Reserve Bank of India (RBI) maintained the status quo on the repo rate, holding it steady at 6.5 per cent, alongside a series of consequential determinations. However, the central bank voiced apprehensions pertaining to the inflation landscape, triggered by the erratic monsoon patterns that have emerged in certain regions of the nation. In the aftermath of the RBI’s decisions, the benchmark indices responded with notable shifts. The central bank’s move to implement an incremental 10 per cent cash reserve ratio (CRR) on NDTL to absorb excess liquidity within the banking system – a reaction to the withdrawal of ₹2,000 currency notes – left discernible ripples across financial indicators.

The augmentation of the CRR is poised to exert a measured influence over the longer term, with its impact anticipated to be particularly subdued on the majority of banks. Notably, the banking sector is poised to uphold its resilience, buoyed by robust asset quality, robust credit expansion, and formidable capitalisation. On a parallel note, the performance of foreign portfolio investors (FPIs) on Dalal Street during the month of August has exhibited marked restraint, diverging significantly from the robust inflows witnessed over the preceding three months. A granular analysis of FPI activity reveals purchases amounting to ₹3,272 crore in Indian equities, with an overall infusion totalling ₹6,241 crore by August 11, 2023.