The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission, it said.
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A section of the market believes RBI should hold rates as negative real rates will hurt savings and investment.
'New record for the Nifty50 is only a question of when.'
Inflation based on the Wholesale Price Index cooled to a 5-year low of 1.77 per cent in October driven by softening prices of fuel and food items.
It may be a little early to cheer the recovery in the fast-moving consumer goods (FMCG) space as a deceleration in discretionary demand, after the festival season, may offset fragile rural recovery, analysts have cautioned. "The overall demand environment for staples remains muted, while discretionary demand trends have seen some deceleration after the festival season. "We believe margins in staples have bottomed out, but we expect only a gradual uptick with the ongoing softening in raw material prices.
When oil prices collapse from $110 to $45, economic agents in India experience a large income windfall.
The WPI number follows retail inflation (CPI) data, which had slipped to a record low of 3.78 per cent in July.
Oil and select auto heavyweights bore the brunt of selling pressure; ONGC, RIL, Tata Motors, M&M key losers.
Higher growth in vegetable demand relative to supply in the recent past has led to an upward trend in inflation, with spikes becoming more frequent. A study by rating agency Crisil found that vegetable inflation has been the most volatile in the food category, in fact. Inflation volatility is detrimental for both consumers and farmers and also sidetracks policymakers in the short term, necessitating frequent and repeated price-smoothing measures.
"The main risk stems from the uncertainty surrounding the outcome of the south west monsoon in view of the rising probability of an El Nio event around July-August, and its implications for food inflation," RBI said, as it kept the status quo on key interest rate for the third time in a row.
The price difference between branded tea and loose tea has narrowed to a mere 5 per cent, helping the consumer to opt for branded labels. According to Bloomberg, the wholesale price index for tea in India gained 74 basis points from 128.30 in January to 222.50 at end of October this year. As a consequence, tea manufacturers in the wholesale and loose tea business, besides branded tea players, have increased prices.
According to currency dealers, any sharp movement in the rupee might result in the Reserve Bank of India intervening in the foreign exchange market.
If credit is not going to flow in response to a policy rate cut, while inflationary pressures, as well as expectations, may be stoked, a rate cut may not be appropriate at this point
Inflation breached the upper end of the RBI's comfort level of 4 per cent plus-minus two percentage points.
Some say the MPC will raise the rate, while others are of the view that there is already de facto interest rate tightening through rising bond yields, which might prompt the central bank to go for a pause.
Rajan has been facing continuous attacks by Bharatiya Janata Party MP Subramanian Swamy and some other sections, who have alleged that he has failed to lower interest rates and boost the economy
The report, however, said it remains watchful of the upside risks to inflation emanating from pass-through of minimum support prices (MSPs), adverse movement in crude oil prices, volatility in global financial markets, lagged impact of the rupee weakness on input prices, adverse implications from fiscal slippage and staggered impact of HRA increases by states and its second-round impact.
The government is scheduled to release index of industrial growth for November and consumer price inflation for December later today.
There are overvaluation and excesses in many pockets of the market. This is most obvious in the IPO market, where loss-making companies have inflicted large losses on investors, observes Debashis Basu.
The rate of price rise of food items stood at 12.68 per cent in the corresponding week of the previous year.
India's annual industrial output grew at a slower-than-expected pace of 3.6 percent in September.
With sales of cooling products turning out dismal this summer due to unseasonal rains, the stocks of related companies are now off their March highs. Shares of fan and air conditioner makers such as Voltas, Symphony, Orient Electric, Johnson Controls-Hitachi Air Conditioning and Crompton Greaves are down 5-23 per cent since March when the summer season saw a firm onset. In comparison, the BSE Sensex index is up 10 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.
Banks and Capital Goods scrips among the top losers in noon deals.
Retail inflation inches up to 3.77%; IIP growth dips to 3-month low
The country saw two straight years of deficient monsoons.
DBS called Rajan's decision not to seek an extension as a 'negative surprise'.
India's industrial production contracted by 3.6 per cent in February, official data showed on Monday. According to the Index of Industrial Production (IIP) data released by the National Statistical Office (NSO), manufacturing sector output declined by 3.7 per cent in February 2021. Retail inflation rose to 5.52 per cent in March, mainly on account of higher food prices, government data showed on Monday. The consumer price index (CPI) based retail inflation stood at 5.03 per cent in February.
Rediff.com takes its readers through the various moods of Raghuram Rajan.
Forex dealers said besides the dollar's gain against other currencies, fresh demand for the American unit from importers and a weak opening in the domestic equity market put pressure on the rupee.
The proposed hike is in accordance with the accepted formula based on the recommendations of the 6th Pay Commission
Onions had the highest inflation rate among all major commodities.
On the reduction in the SLR ratio, he said it was a signal from the point of view of long-term reforms.
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Many analysts argue with limited space for a fiscal stimulus, the burden of lifting growth lies squarely on monetary policy.
Although the WPI-based inflation has been in the negative for two consecutive weeks, the Consumer Price Index, which measures movement in the prices that consumers pay, reported double-digit increase in May.
The headline for corporate profit growth has been very encouraging in the July-September quarter (Q2) of 2023-24 (FY24), with the combined net profit of listed companies up by 38 per cent year-on-year. However, the earnings distribution has been very lopsided, with most of the growth coming from public-sector oil-marketing companies (OMCs), banks, non-bank lenders, automobile (auto) companies, and cement producers. By comparison, companies from information technology services, fast-moving consumer goods (FMCG), retail, and consumer durables were disappointed, experiencing a sharp slowdown in net sales growth and a relatively muted increase in reported net profit.
The Sensex ended 229 points down at 27,602 and the Nifty ended down 63 points at 8,293.
The breadth, indicating the overall health of the market, was slightly positive
The rate of price rise in food items stood at 17.14 per cent in the corresponding week of 2010.
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