N Sethuram, CIO, SBI Mutual Fund said that the apex bank’s decision is not going to impact the equities in the short run. But, one has to see how the stricter provisioning norms of the banks' exposure towards capital market translates into rate hike. On the interest rate front, the impact can come over a period of time, say in one month. However, "the impact would be marginal," he said.

Regarding debt funds, Sethuram said, the impact of policy stance on overall debt market would not be much. The return on short term debt funds may go up while for the liquid funds of short term duration may witness rise in return by 5 to 10 bps, Sethuram said. He added that the market was expecting a hike in the reverse repo and bank rate too which did not happen.

It may be mentioned here that RBI in the third quarterly review of the annual statement has hiked the repo rate from 7.25% to 7.5% and increased the provisioning requirement on banks exposure to 2% from 1%.

A senior investment banker said that RBI’s policy on higher provisioning may impact the fund flow to the bourses over a period of time. The repo rate hike may witness a strain on liquidity leading to some profit booking by the investors for a while.

However, the market would get stabilise in the longer run.

Taking a cue from Sethuram, Vishal Goyal, banking analyst, Edelweiss Securities, said that the policy announcement is on expected lines. However, the higher risk weightage and higher provisioning would have 'mild negative’ impact on the banking stocks.