From the Sensex pack, IndusInd Bank, NTPC, Asian Paints, Hindustan Unilever, JSW Steel, Tech Mahindra, Bajaj Finance, Infosys, Wipro, ICICI Bank, Bajaj Finserv, HDFC Bank and Tata Motors were among the major laggards. HCL Technologies, Power Grid, Titan, Reliance Industries, UltraTech Cement, Tata Steel, State Bank of India and Mahindra & Mahindra were the gainers.
The Reserve Bank of India on Friday cut short-term lending rate by 0.25 per cent.
The Monetary Policy Committee (MPC) is expected to maintain the status quo on policy rates for the fourth consecutive time in its October 4-6 review meeting. The incremental information available since its last meeting in August suggests that growth and inflation prints for the second quarter (Q2) of financial year 2023-24 (FY24) will exceed the committee's projections. However, the Consumer Price Index (CPI)-based inflation is expected to moderate in the second half (H2) of FY24.
The Reserve Bank is expected to go for another rate hike of 0.40 per cent at the scheduled review of the monetary policy next week, a foreign brokerage said on Friday. The central bank's rate setting panel will follow it up with a 0.35 per cent hike in rates at the next review in August, or make it into a 0.50 per cent hike next week and a 0.25 per cent increase in August, to make the total quantum of rate hikes at 0.75 per cent, the report by Bofa Securities said. On May 4, the Reserve Bank of India (RBI) hiked rates by 0.40 per cent, and Governor Shaktikanta Das has already called a rate hike at the forthcoming review as a "no brainer" given the pressure to maintain its core mandate of inflation in the targeted band of under 6 per cent.
Bond markets, global as well as domestic, are likely headed towards hard times over the next three to six months, as higher vegetable prices, rising fuel costs, and improved wages may keep inflation hot, believe analysts, who expect the yields to hit 7.5 per cent in the near-term from the current 7.234 per cent. In this backdrop, they suggest investors can put in money in funds/instruments with residual maturity of 4 to 6 years, while longer-term investors can allocate cautiously to the longer end in the range beyond 7 years.
All in all, the global economic recovery has been wavering as a result of rising crude oil and commodities prices and as a result, interest rate hike would further affect growth.
UCO Bank mulls AT1 offering to raise Rs 1,000 cr.
The Reserve Bank of India on Friday cut short-term lending rate by 0.25 per cent.
State Bank of India (SBI) may carry out a planned Rs 10,000 crore sale of infrastructure bonds in the market this week, with the securities likely to be of 15-year maturity, sources told Business Standard. SBI, the country's largest bank, had last week said its board had approved the issuance of infrastructure bonds in the current fiscal year. It, however, had not mentioned the maturity of the bonds or when the sale would take place.
Breaking the streak of continuous fall in outstanding amounts, non-resident Indian (NRI) deposits rose for the first time in the financial year to $134.54 billion in October 2022. The figure was $133.67 billion in September. Reserve Bank of India (RBI) data showed that NRI deposits were in shrinking mode for the first six months of FY23. They fell to $133.67 billion in September from $139 billion in March.
HDFC Bank, the country's largest private-sector lender, lost to competition wholesale loans of around Rs 50,000 crore after it increased interest rates in May, said Chief Financial Officer Srinivasan Vaidyanathan in an analyst call. "There were some customers who were offered lower rates by other market participants. "But we decided not to cut back on our rates," he said while addressing analysts after the announcement of the bank's Q1 earnings.
But there are challenges, observes Tamal Bandyopadhyay.
Industry has been going through a phase of high interest rates, declining demand and insufficient working capital.
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The RBI's reluctance to cut rates should be seen as a case of inability in the face of inflation.
RBI goes in for 50-basis point increase in two stages.
The Reserve Bank on Wednesday increased the benchmark lending rate by 40 basis points (bps) to 4.40 per cent in a bid to contain inflation, which has remained stubbornly above the target zone of 6 per cent for the last three months. The decision follows an unscheduled meeting of the Monetary Policy Committee (MPC), with all six members unanimously voting for a rate hike while maintaining the accommodative stance. While the inflation has remained above the targetted 6 per cent since January, RBI Governor Shaktikanta Das said the inflation print in April is also likely to be high.
An action on the rate front is unlikely to figure in Rajan's plan for the moment.
The central bank has hiked however reverse repo rate by 0.25 per cent.
RBI governor Raghuram Rajan says a cut in cash reserve ration will not at all impact lending rates.
Reserve Bank of India's move to cut cash reserve ratio has been welcomed by analysts.
CII suggested the policy measures required to ease the tight liquidity situation by cutting CRR by at least 50 basis points.
Observing that MSME sector plays an important role in the growth of the Indian economy, RBI said the restructuring of the borrower account has been extended by further one year to March 31, 2021.
The Reserve Bank of India has left bank rate and cash reserve ratio unchanged at 6 per cent and 4.5 per cent, respectively.
The rate cuts are expected to infuse Rs 80,000 crore into the banking system.
CRR stand at 5.5 per cent after a 50 basis points cut in January.
Liquidity is expected to remain comfortable this week, albeit the rate at which it is available may inch up rather than remaining below 1 per cent.
Bankers on Thursday said the status quo in the monetary stance of the Reserve Bank is largely on expected lines taken after considering the tight liquidity situation and overall cooling inflation numbers.
The BSE Bank index was the worst performer among key indices with a steep fall of 463.96 points, or nearly 6.5 per cent at 6,749.78.
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 Reserve Bank of India raises Cash Reserve Ratio by 75 basis points at 5.75 per cent. RBI, hwoever, has kept the repo and reverse repo rates unchanged at 4.75 per cent and 3.25 per cent, respectively.
The Reserve Bank of India (RBI) on Friday decided to leave the benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance, implying rate cuts in the future if need arises to support the economy hit by the Covid-19 pandemic.
MSS bonds are issued with the objective of providing the central bank with a stock of securities with which it can intervene in the market for managing liquidity. These securities are not issued to meet the government's expenditure.
The RBI has made serious attempts to improve fiscal deficit.
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.
The Reserve Bank might hike the Cash Reserve Ratio (statutory cash balances banks maintain with the apex bank) by 0.50% in its credit policy if inflation remains high, feel Indian bankers. The RBI is scheduled to announce annual credit policy for fiscal 2008-09 on April 29. RBI is likely to tighten money supply in its forthcoming annual credit policy to suck out excess liquidity from the system. Growth has moderated in recent months.
SBI Chairman Pratip Chaudhuri on Tuesday once again expressed his open disagreement with the RBI on cash reserve ratio (CRR) saying it is a "waste" for the economy and successive interest rate cuts by central bank have failed to contain inflation.
