Janet Yellen is guiding the Federal Reserve towards its first rate rise in a decade armed with traditional economic models that some economists worry could fail her in a world of massive money printing and near zero rates.
The Indian rupee is likely to depreciate further against the US dollar through the end of 2024. This is due to the continued strengthening of the greenback, combined with the weakening of the Chinese yuan, which is expected to keep pressure on the Indian currency.
Days after the US Fed raised the interest rate, the RBI may go in for its third consecutive policy rate hike by at least 35 basis points to check high retail inflation, experts said. The central bank has already announced to gradually withdraw its accommodative monetary policy stance. The Reserve Bank of India's rate-setting panel -- the Monetary Policy Committee -- will meet for three days from August 3 to deliberate on the prevailing economic situation and announce its bi-monthly review on Friday.
'While Indian markets are indeed not inexpensive, the valuations of largecap stocks are still a considerable distance from being overstretched.'
The Reserve Bank is unlikely to ease the benchmark policy rate during 2024 given the uncertainty over food inflation, State Bank of India (SBI) chairman C S Setty has said. The US Federal Reserve's first cut in interest rates in more than four years is expected soon, triggering central banks in other economies to follow suit. "On the rate front, a lot of central banks are taking independent calls.
'Any normalisation exercise will bring its share of volatility.'
'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.'
US gold futures slid over 1 per cent on Thursday, while silver futures dropped 2 per cent.
Among the 30 Sensex firms, HCL Technologies, NTPC, Bajaj Finserv, Tech Mahindra, JSW Steel, Titan, Mahindra & Mahindra, Tata Steel, Larsen & Toubro and Tata Consultancy Services were the biggest gainers. Kotak Mahindra Bank, IndusInd Bank, Maruti and Hindustan Unilever were among the laggards.
From the 30 Sensex firms, Mahindra & Mahindra, JSW Steel, Maruti, Tata Steel, Larsen & Toubro, ICICI Bank, Power Grid, Nestle, Bharti Airtel and Adani Ports were the biggest gainers. Tata Consultancy Services emerged as the only laggard.
Three major central banks have hit the zero limit, the Fed, the European Central Bank and the Bank of Japan.
'India represents one of the top opportunities with robust growth, solid fundamentals, and openness to foreign investment.'
As COVID-19 infections spike in the country resulting in restrictions in various states and impacting the fragile recovery, many economists are expecting RBI to delay the policy normalisation move, which is expected in the February review. The country has reported a single-day rise of 58,097 new Covid-19 cases as of Wednesday morning--the highest in around 199 days -- of which 2,135 are Omicron cases and later in the day, the first confirmed Omicron-related death has also been reported. Maharashtra recorded the maximum number of 653 Omicron cases followed by Delhi at 464, Kerala 185, Rajasthan 174, Gujarat 154 and Tamil Nadu 121 cases, taking the total tally of cases to 3,50,18,358.
From the Sensex pack, JSW Steel, Tata Steel, NTPC and UltraTech Cement emerged as major winners, closing the day with a gain of up to 3.33 per cent. On the other hand, Asian Paints, ITC, L&T and SBI were the laggards, ending the session up to 3.95 per cent lower. Of the 30 Sensex stocks, 14 closed the day in green, while on the 50-stock index Nifty 25 scrips ended with gains.
From the Sensex pack, Tata Motors, NTPC, Bajaj Finserv, Power Grid Corp, Titan, Asian Paints, IndusInd Bank, Maruti Suzuki India and Tata Steel were among the biggest gainers. Sun Pharmaceuticals, ITC, Hindustan Unilever, Bharti Airtel, UltraTech Cement and Reliance Industries were among the laggards.
At the same time, however, officials at the central bank lowered their projections for the long-run target interest rate, evidence of slightly diminished expectations for a nation climbing out of a severe crisis and struggling with demographic headwinds like declining labor force participation.
President Donald Trump has tapped Jerome "Jay" Powell to lead the US central bank, bypassing Janet Yellen for a second term despite praising her excellent management of the world's largest economy over the past four years.
'Higher interest rates make gold less attractive as it doesn't generate yield.' 'However, with rates set to fall, the tables are turning for gold.'
From the Sensex firms, Bajaj Finance, Bajaj Finserv, Infosys, Bharti Airtel, Kotak Mahindra Bank, Larsen & Toubro, Mahindra & Mahindra, ITC, Tech Mahindra, Tata Steel, Tata Motors, Titan, Reliance Industries and Nestle were the major winners. Hindustan Unilever, Power Grid, Axis Bank, Tata Consultancy Services, State Bank of India, Asian Paints and Wipro were the laggards.
Titan, IndusInd Bank, Axis Bank, State Bank of India, Power Grid, NTPC and Tata Motors were among the among the major gainers. Mahindra & Mahindra, Larsen & Toubro, Nestle, JSW Steel, Infosys and Tata Consultancy Services, Tech Mahindra and Maruti were the major laggards.
Overseas fundraising by Indian firms is experiencing a robust revival in 2024, following a lacklustre 2023. This resurgence is primarily driven by strong demand for high-yield bonds from international investors amid improving liquidity conditions and reduced hedging costs. Indian companies raised ~32,619 crore through overseas bonds in the first half of 2024, surpassing the total amount raised via such instruments in the entire 2023, which stood at ~31,218 crore, according to PRIME Database. In comparison, ~45,237 crore was raised in 2022 and ~1.05 trillion was secured in 2021.
Benchmark indices rallied on Thursday with the Sensex and Nifty climbing nearly 2 per cent, helped by heavy buying in Bajaj Finance shares amid a mixed trend in the global equity markets. The 30-share BSE benchmark jumped 1,041.47 points or 1.87 per cent to settle at 56,857.79. During the day, it rallied 1,097.9 points or 1.96 per cent to 56,914.22. The broader NSE Nifty advanced 287.80 points or 1.73 per cent to 16,929.60.
The nomination would put Yellen on course to be the first woman to lead the institution.
A higher-than-expected consumer price inflation (CPI) print for March in the US has dashed hopes of an interest rate cut by the US Federal Reserve (US Fed) in June. Analysts now expect the US central bank to start cutting rates in September, provided inflation remains in check and oil prices remain supportive. The markets, analysts believe, partially factored in this possibility.
Benchmark BSE Sensex rose by 160 points on Thursday in choppy trade following gains in select banking and auto counters amid mixed global cues. The 30-share index gained 160 points to settle at 62,570.68 as 13 of its components advanced while 17 declined. The barometer opened lower but later gained momentum to touch a high of 62,633.56 in the day's trade.
Within three trading sessions in May, foreign portfolio investors (FPIs) have pumped in Rs 9,461 crore into Indian equities. This follows net inflows worth Rs 7,936 crore in March, and Rs 11,631 crore in April. The trend, analysts said, could continue going ahead as the US Federal Reserve may soon halt its interest rate hike cycle, which will strengthen foreign fund inflows into emerging markets, including India.
Weaker-than-expected growth in US jobs in recent months had already forced US central bankers to put off a rate hike at their meeting last week
The US Federal Reserve's interest rate decision, quarterly earnings of corporates and domestic macroeconomic data will influence trading in the equity market in a holiday-shortened week ahead, analysts said. Foreign funds' trading activity, monthly automobile sales data and global trends would also guide market movement this week, they added. Markets would remain closed on Monday on account of 'Maharashtra Day'.
Broader markets underperformed indices with BSE Midcap down 0.43% while the Smallcap index fell 0.07%.
Corporate bond issuances fell by around 22 per cent in August, despite easing yields as issuers delayed raising funds awaiting the US Federal Reserve to start cutting interest rates from this month. Corporates and financial institutions expect yields to fall further and borrowing costs to become cheaper, said market participants. The US Fed is widely expected to cut interest rates by 25 bps in the 17-18 September meeting, marking the start of a downward interest rate cycle.
In a drastic measure to stem any major disruption to the US economy as a result of the coronavirus outbreak, the Federal Reserve has cut its benchmark interest rate to almost zero and said it would buy USD700 billion in bonds. The covid-19 pandemic has sickened more than 156,000 people worldwide and left more than 5,800 dead. The death toll in the US stands at 68, while infections neared 3,700.
Reserve Bank of India (RBI) is unlikely to cut the benchmark interest rate at its upcoming monetary policy review meeting, taking place soon after the announcement of the Lok Sabha election results, amid inflation challenges, said experts. The Monetary Policy Committee (MPC) may also refrain from rate cut as economic growth is picking up, notwithstanding the elevated interest rate of 6.5 per cent (repo) prevailing since February 2023. The meeting of the Reserve Bank Governor Shaktikanta Das headed MPC is scheduled for June 5 to 7.
'The problem is that the bubble may not only be in valuations, but also in investors' minds.'
From the Sensex pack, Mahindra & Mahindra, UltraTech Cement, Power Grid, State Bank of India, ITC, Titan, Tata Motors and ICICI Bank were among the major winners. Tata Consultancy Services, Bajaj Finance, Tech Mahindra, Asian Paints and HDFC were among the major laggards.
'The main worry is lots of new investors coming into the markets in order to make a quick buck/easy money.' 'Those things are happening again and have happened in the past as well.' 'All that has led to problems.' 'We are not there yet, but will get there eventually.'
The fuzziness of Trump's economic blueprint remains the biggest risk.
If the Fed hikes policy rates for the dollar, that will probably mean a move into US Treasuries for speculators.
The Reserve Bank of India on Friday revised upwards the GDP growth projection for the current fiscal to 7.2 per cent from 7 per cent on rising private consumption and revival of demand in rural areas. Unveiling the bi-monthly monetary policy, RBI Governor Shaktikanta Das said estimates released by the National Statistical Office (NSO) placed India's real gross domestic product (GDP) growth at 8.2 per cent in 2023-24. "During 2024-25 so far, domestic economic activity has maintained resilience," he said, adding that manufacturing activity continues to gain ground on the back of strengthening domestic demand.
Equity markets will take cues from global trends and trading activity of foreign investors, while in the latter part of the week the first quarter earnings from IT majors TCS and HCL Technologies would guide investor sentiments, analysts said. Markets may consolidate after the record rally last week, experts added. "On the domestic front, the Q1 earnings season begins this week. Key companies such as TCS and HCL Technologies will release their earnings on July 11 and 12, 2024, respectively.
Rajan has ignored pressure to loosen policy.
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