The Securities and Exchange Board of India's (Sebi's) board on Wednesday allowed foreign portfolio investors (FPIs) to trade in exchange-traded commodity derivatives. The move, it said, "will enhance liquidity and market depth, as well as promote efficient price discovery." Overseas investors will only be allowed to deal in non-agricultural commodity derivatives and only cash-settled contracts.
Financial markets are under stress and require steps by the central bank for market stability and revival of economic growth, he said while announcing the decisions taken by the Monetary Policy Committee in Mumbai.
Pranjal Kamra, CEO, Finology Ventures, lists seven efficient ways to cope with the rise in EMIs even as you balance your monthly budgets.
Banks looking to raise capital via bond sales to fund decade-high credit growth were compelled to put some of these debt issuances on hold amid a sharp rise in yields since late September, sources told Business Standard. A major private lender, Axis Bank, has not yet followed through with a planned issuance of infrastructure bonds worth around Rs 3,000 crore. This is because volatility in the bond market in late September led to investors seeking higher yields, sources said.
The new rates, effective Wednesday, is the third reduction by SBI in this financial year having cut the rates by 5 bps each in April and May, while its home loan rates has come down by 20 bps during this period.
These are the highlights of RBI Governor Shaktikanta Das's statement and resolution of the Monetary Policy Committee (MPC):
The fourth consecutive rate cut is expected to lower equated monthly instalments (EMIs) for home and auto buyers, and borrowing cost for corporate.
It has been a choppy calendar year 2022 (CY22) for global financial markets amid the spectre of rising inflation that led most central banks, especially the US Federal Reserve (US Fed), to tighten their monetary policy. Most equity indices across the globe have seen a sharp fall from their respective peak levels in this backdrop. FTSE India, for instance, has corrected 16 per cent from its October peak.
The balance sheet of the Reserve Bank plays a critical role in the functioning of the country's economy.
Reversal in the declining economic growth trajectory is clearly the need of the hour and all steps should be taken to bring about this change.
The Sensex jumped 412.23 points on Friday, braving heavy volatility during the day, amid the Reserve Bank of India maintaining status quo on the benchmark lending rate and buying in index heavyweights Reliance Industries Limited and ITC. The BSE Sensex climbed 412.23 points or 0.70 per cent to settle at 59,447.18. During the day, the benchmark hit a high of 59,654.44 and a low 58,876.36. The Nifty also gained 144.80 points or 0.82 per cent to finish at 17,784.35.
Mutual funds focused on investing in fixed-income securities witnessed a heavy outflow of Rs 92,248 crore in June on uncertain macro environment, driven by expectations around an increasing rate cycle, higher commodity prices and slowdown in growth. This comes following a net outflow of Rs 32,722 crore in May and an inflow of Rs 54,756 crore in April, data available with Association of Mutual Funds in India (Amfi) showed. Out of the 16 fixed-income or debt fund categories, 14 witnessed net outflows during the month under review.
The government has no plan to print currency notes to tide over the current economic crisis triggered by the outbreak of COVID-19 pandemic, Finance Minister Nirmala Sitharaman informed Parliament on Monday. To a question on whether there is any plan to print currency to tide over the crisis, the finance minister said, "No Sir". Many economists and experts have suggested to the government to print more currency notes to tide over the difficult economic situation with a view to support the economy ravaged by the spread of COVID-19, and protect jobs.
All public sector banks have moved to such a regime voluntarily, while private banks are yet to. The state-run banks have introduced repo-linked products for floating-rate home and auto loans, but the RBI said loans to micro, small and medium enterprises (MSMEs) should also be linked to an external benchmark.
India has been relatively insulated from the severe headwinds in the West. However, with a third of the global economy expected to slip into recession in calendar year 2023, the impact will strongly be felt on India's exports and trade economy, leading economists said in a panel discussion at the Business Standard BFSI Insight Summit in Mumbai on Wednesday. The panel comprised former Reserve Bank of India executive director and former Monetary Policy Committee member Mridul Saggar, State Bank of India Chief Economic Advisor Soumya Kanti Ghosh, Citibank India Chief Economist Samiran Chakraborty, ICRA Chief Economist Aditi Nayar, and IndusInd Bank Chief Economist Gaurav Kapoor. The topic of the panel discussion was No recession in sight: Is India decoupled from developed economies?
The Reserve Bank of India on Friday raised the benchmark lending rate by 50 basis points to 5.40 per cent to tame inflation.
Axis Bank was the top gainer in the Sensex pack, surging over 13 per cent, followed by ICICI Bank, IndusInd Bank, Maruti, TCS, Kotak Bank and Reliance Industries. On the other hand, Nestle India, HUL, Tech Mahindra and Sun Pharma ended in the red. NSE Nifty zoomed 273.95 points, or 3.03 per cent, to finish at 9,266.75.
The Index of Industrial Production (IIP) grew by 1.4 per cent in November as most components like manufacturing, electricity, mining, primary goods, and consumer durables witnessed a slowdown, according to data released by the National Statistical Office (NSO) on Wednesday. This is on the base of a decline of 1.7 per cent in November 2020 and before the new Covid variant started impacting economic activity. IIP growth was lower than the 4 per cent expansion recorded in the previous month but was better than a 1.6 per cent contraction seen in November 2020. Separately, rising prices of kitchen staples pushed retail inflation, or rate of price increase, to 5.59 per cent in December 2021, bringing it close to the upper band of Reserve Bank's comfort zone.
Growth might be impacted by up to 0.30 per cent in the March quarter as normal economic activities come under pressure due to restrictions being imposed by more states to curb rising Omicron cases, economists at the country's largest private sector lender HDFC Bank said on Tuesday. The economists said they were earlier estimating Q4 growth to come at 6.1 per cent, which can get impacted by 0.2-0.3 per cent because of the Omicron threat. "With states imposing Covid-related restrictions (night curfew on movement of people, restaurants allowed at 50 per cent capacity, offices to operate at 50 per cent capacity in various states), economic activity is likely to get impacted in Q4FY22," they said.
The RBI on Wednesday cautioned that while the Indian economy appears capable of weathering the deterioration in geopolitical conditions amid the ongoing Russia-Ukraine war, it faces headwinds from global spillovers from geopolitical tensions, elevated commodity prices and moderating external demand. The RBI, however, did not tinker with the GDP growth projection made in April. It had slashed the GDP growth projection for the fiscal 2022-23 to 7.2 per cent from its earlier forecast of 7.8 per cent.
The Lok Sabha elections in 2024 are not a consideration when it comes to monetary policymaking, said Reserve Bank of India governor Shaktikanta Das to underscore the central bank's commitment to controlling inflation. "It's not possible for me to comment what we do in the next MPC (Monetary Policy Committee), but one thing I can tell and I would like to make it very clear-that the fact of elections coming up in 2024 is not a factor at all so far as monetary policymaking is concerned. "Monetary policymaking is for checking (and) controlling inflation," Das said at the Business Standard, BFSI Insight Summit.
Last month, RBI slashed cash reserve ratio -- the percentage of deposits that banks have to keep with the RBI -- from 5.5 per cent to 4.75 per cent. With this, the central bank had infused Rs 48,000 crore (Rs 480 billion) into the economy.
The Reserve Bank on Friday retained the GDP forecast for the current financial year at 9.5 per cent and flagged global semiconductor shortages, elevated commodity prices and potential global financial market volatility as downside risks to economic growth. In his address after the three-day meeting of the rate-setting panel, RBI Governor Shaktikanta Das said recovery in aggregate demand gathered pace in August-September, and it is reflected in high-frequency indicators, like railway freight traffic; port cargo; cement production; electricity demand; e-way bills; GST and toll collections. "The ebbing of infections, together with improving consumer confidence, has been supporting private consumption," he said, and added the pent-up demand and the festival season should give further fillip to urban demand in the second half of the financial year.
The Reserve Bank will go for a "dovish pause" at Wednesday's policy review announcement amid developments such as a rise in inflation, government maintaining the inflation target band and a likely impact on growth due to local lockdowns on rising COVID-19 infections, analysts said on Monday. Economists at American brokerage Bofa Securities said price stability, growth and financial stability will become the prime focus areas for the central bank going forward. "The RBI MPC (Monetary Policy Committee) should deliver another dovish pause on Wednesday," it said. The policy announcement, the first for the fiscal, will come days after the government maintained the RBI's target to ensure inflation to be within 2-6 per cent band for five more years.
The government's total liabilities rose to Rs 128.41 lakh crore in December quarter from Rs 125.71 lakh crore in the three months ended September 2021, according to the latest public debt management report. The increase reflects a quarter-on-quarter increase of 2.15 per cent in October-December 2021-22. In absolute terms, the total liabilities, including liabilities under the 'Public Account' of the government, jumped to Rs 1,28,41,996 crore at the end of December 2021.
The overall confirmed cases on the mainland have reached 81,518 as of Monday, which included 3,305 people who died of the of disease.
Tata Steel was the top gainer in the Sensex pack, rising around 4 per cent, followed by Infosys, Bajaj Finance, TCS, HCL Tech, ICICI Bank and Tech Mahindra. On the other hand, Bharti Airtel, M&M, L&T and Axis Bank were among the laggards.
'Marginal rates will definitely affect the consumer's decision in entering a new transaction, but in reality, they don't affect much because banks/financial institutions have come up with step-up EMIs: 50% of home loans which exceed 15 years in India are prepaid, within 7-8 years.' 'This doesn't happen anywhere in the world.'
Gaurav Garg, head of research at CapitalVia Global Research Limited will answer your stock market queries.
'Credit expansion is probably the quickest way to get the economy going again.' 'Easy credit is like a shot of nitro in a race car: In timely, small, quick, doses it can give a tremendous boost but carried to extreme it can destroy the engine,' points out S Muralidharan, former managing director, BNP Paribas.
India's GDP may turn positive at 1.3 per cent in the third quarter of 2020-21, having witnessed contraction in the previous two quarters due to the coronavirus pandemic, as the number of cases is falling and public spending has started rising, according to a report. The government will release the GDP numbers for the October-December quarter of the current fiscal on Friday. Projecting that the gross domestic product (GDP) may have returned to the black in the last quarter of the calendar year 2020, DBS Bank in the report said the full-year growth in real terms may be at a negative 6.8 per cent.
Das said that global economic activity has remained fragile and the surge in COVID-19 cases has subdued early signs of revival.
The retail inflation rate breached the 6 per cent upper tolerance limit of the RBI for the first time in seven months in January, while the wholesale price index stayed in double-digits for the 10th month in a row, showed two sets of data released by the government on Monday. Retail inflation, the key input for the RBI while reviewing the repo rate every two months, soared during the month mainly because of a spike in certain food items. The previous high for retail inflation was 6.26 per cent in June 2021.
'Some people even boldly ask for a 100% increase in the salary.'
The Reserve Bank of India (RBI) on Friday said it will maintain comfortable liquidity conditions and conduct market operations in the form of outright and special open market operations. It will conduct on tap targeted long-term repo operations (TLTRO) with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate.
Services sector activities improved further and touched a five-month high in April driven by a surge in incoming new work orders that boosted business activity and supported a renewed increase in employment, according to a survey. The seasonally adjusted S&P Global India Services PMI Business Activity Index jumped to 57.9 in April, from 53.6 in March, highlighting a sharp rate of expansion that was the fastest since last November amid mounting price pressures. For the ninth straight month, the services sector witnessed an expansion in output.
All members of the Monetary Policy Committee (MPC) -- Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Mridul K Saggar, Michael Debabrata Patra and Shaktikanta Das -- had unanimously voted to keep the policy repo rate unchanged at 4 per cent after the three-day meet of the panel earlier this month. Further, except Varma, other members voted to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward. Varma expressed reservations on this part of the MPC resolution, according to the minutes.
'You have to be a total anti-national bozo to shut down the Nokia plant in Sriperumbudur, which was the first large manufacturing plant for mobile phones in India.' 'Why was the unit shut down? Because of somebody's ego.'
Finance Minister Nirmala Sitharaman is scheduled to address the post-budget meeting of the RBI's central board on Monday and highlight key points of the Union Budget 2022-23, including the fiscal consolidation roadmap and high capex plan. It has been a custom that the finance minister addresses the RBI board, consisting of RBI Governor and existing four deputy governors, after the Budget. The meeting has been scheduled for February 14 where she would be addressing the board members and talk about announcements made in the Budget to perk up growth hit by three waves of COVID-19, sources said.
Shaktikanta Das is a master of the finest balancing act who listens to all but takes his own decisions, discovers Tamal Bandyopadhyay.
