From the 30-share pack, Adani Port, Bharti Airtel, Asian Paints, IndusInd Bank, Bajaj Finserv, Reliance Industries, Infosys, UltraTech Cement, HDFC Bank, HCL Technologies and ICICI Bank were among the laggards. Tata Motors, Axis Bank, Maruti, Larsen & Toubro, ITC and Tata Steel were among the gainers.
With the 115 bps reduction in repo rate beginning February, banks have already transmitted 72 bps to the customers on fresh loans and some large banks have transmitted as much as 85 basis points.
Governor Raghuram Rajan's move to cut the MSF rate, at which banks borrow if they exceed their repo borrowing limits, by 0.50 per cent to 9 per cent should not be construed as a reversal in his policy stance and is more of a normalising measure, Citi said in a note.
Indian economy is in a sweet spot, with a mix of solid growth and moderating inflation, Moody's Ratings said, forecasting a 7.2 per cent GDP growth in the 2024 calendar year and 6.6 per cent in the next. In its Global Macro Outlook 2025-26, the rating agency said the global economy has shown remarkable resilience in bouncing back from supply chain disruptions during the pandemic, an energy and food crisis after the Russia-Ukraine war began, high inflation and consequent monetary policy tightening.
'Consider 40% to 50% in equities, 10% in gold as a hedge, and the remaining 30% to 40% split between multi-asset funds and hybrid funds.'
The three day MPC meeting began on Monday and the decision will be announced on Wednesday by RBI Governor Shaktikanta Das.
The move will to a large extent speed up the monetary transmission process--which is banks passing on the rate cuts that the Reserve Bank announces to their borrowers without much delays--something that has been missing all these while and something that the RBI has been unhappy with.
Shaktikanta Das will demit the office on Tuesday after completing six years as the 25th Governor of the Reserve Bank of India. Revenue Secretary Sanjay Malhotra will replace him as the 26th Governor. He was appointed as the Governor on December 12, 2018, after the abrupt exit of Urjit Patel.
Former central bank deputy governor S S Tarapore today said the Reserve Bank of India's monetary measures to contain inflation have been "appropriate" as of today
Sanjay Malhotra takes charge as the 26th RBI governor at a time when headline retail inflation has shot up to 6.2%.
Today, the economy requires a certain amount of push not just from the monetary policy but also from its transmission: Das.
Monetary policy committee had recommended no change in the key rate.
RBI said inflation in the second half of the current fiscal is projected at 2.7-3.2%. It retained its GDP forecast for the current fiscal at 7.4%
Benchmark equity indices Sensex and Nifty pared early gains to settle lower on Wednesday due to late selling in index major Reliance Industries, ITC and HDFC Bank even as the RBI took the first step towards a rate cut in its monetary policy review. Erasing its early gains, the 30-share BSE Sensex fell 167.71 points or 0.21 per cent to close at 81,467.1. During the day, it surged 684.4 points or 0.83 per cent to hit an intra-day high of 82,319.21.
In September, the headline inflation accelerated to a seven-month high of 6.46 per cent, while the retail inflation quickened to 9.84 per cent.
Short-term government bonds fell behind longer-dated securities in demand this month so far due to a liquidity crunch in the banking system and expectations of a delay in a rate cut, said market participants. Investors have favoured longer-tenure government bonds, or g-secs, with insurance companies and pension funds leading the charge by stocking up on those with maturities of 30 years and more. Preference for longer-term securities was strengthened by the conclusion of the borrowing programme, which compelled institutional investors to fulfil their requirements in the secondary market.
The Federation of Indian Export Organisations welcomed the RBI's decision to cut repo rate and said it would augur well for the exports, while asking for slashing rupee credit by 1.0-1.5% in view of the appreciating domestic currency.
Reserve Bank of India Deputy Governor Rakesh Mohan said on Wednesday that the repo rate would not be cut right now.
Reserve Bank of India Governor Bimal Jalan said on Wednesday that the central bank had a soft and flexible stance on altering the repo rate if monetary conditions warranted.\n\n\n\n
IT majors and Maruti Suzuki down 8% were the top losers among Sensex-30.
Returns of liquid funds are meant only for the short term and don't help investors create wealth over the long term, as equity funds do.
The US Fed rate cut of 50 basis points is unlikely to have any significant impact on foreign inflows into India, Economic Affairs Secretary Ajay Seth said on Thursday. He said the US Federal Reserve has done what it assesses is good for the largest economy in the world, but the RBI will take a decision on interest rate cut keeping the Indian economy in mind. "It is a positive for the global economy, including the Indian economy. "It is a 50 basis points cut from a high level.
FDs are not advisable for long-term wealth creation as their post-inflation, post-tax returns are not very attractive.
The Reserve Bank of India (RBI) may opt for a 25 per cent cut in the repo rate, to prop sagging demand in the interest rate-sensitive durables sector in the mid-term review of its 2007-08 monetary policy on October 30.The likely reduction in the repo rate would take place despite concerns about inflation, which suggest that interest rates can be left unchanged, banking sources said.
According to the research arm of the country's largest lender State Bank of India, with stability in the currency, the RBI Governor is likely to lower the marginal standing facility rate, at which the RBI lends to the banks, once the lenders exhaust their overnight repo borrowing limits.
Expressing disappointment over the hike in repo rate by the RBI, India Inc on Friday said a rate cut by the bank would have helped ameliorate sentiments as businesses are "reeling" under a tight liquidity crunch due to high cost of capital.
Reserve Bank of India cut interest rates for a third time this year.
Union Finance Minister Nirmala Sitharaman on Monday said people are finding current interest rates "very stressful" and urged banks to make them affordable. Speaking at an event organised by State Bank of India, the finance minister said that at present, India requires industry to ramp up and invest in new facilities, and added that lowering lending rates can help achieve the "Viksit Bharat" aspiration.
The Monetary policy committe comprising 6 members voted 6-0 in the favour of the rate cut.
The economic growth is likely to moderate to 6.1 per cent, slowest in over seven quarters, from 6.6 per cent last year same period.
The Reserve Bank of India has no plans to change the repo rate as of now, a senior official told Reuters of Friday.
Beyond the fourth quarter of 2019, the report does not see space for further cuts primarily as headline inflation is likely to pick up and cross the 4 per cent target by the end of the year, and output gaps are also estimated to close.
Reserve Bank on Tuesday kept the bank rate and CRR unchanged, but hiked repo and reverse repo rate by 0.25 per cent to 5.5 per cent and 6.5 per cent respectively as part of measures to rein in inflation.
The repo rate, at which the central bank lends to the system, will come down to 5.75 per cent after the cut.
Reserve Bank of India (RBI) Governor Shaktikanta Das has said the decision on interest rate moderation will be based on long-term inflation trajectory and not monthly data. The Monetary Policy Committee (MPC) headed by the RBI Governor is scheduled to meet between October 7 and 9 and take call on interest rate. The RBI kept the repo rate unchanged at 6.5 per cent for the ninth time in a row amid risks from higher food inflation.
Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic. The central bank reduced the reverse repo rate -- the rate at which banks park their fund with the central bank -- by 25 basis points to 3.75 per cent.
Former Reserve Bank Deputy Governor S S Tarapore on Thursday said that the apex bank should not lower its repo and cash reserve ratio rates in its forthcoming monetary policy review.
The cost of deposits is on the rise, but banks can't raise interest rate on close to 60% of their loan books, points out Tamal Bandyopadhyay.
