While a pick-up in summer monsoon rains in recent weeks is expected to cool food inflation, most analysts don't anticipate another rate cut before a new governor is on the job
Fund managers are withdrawing after a two-year long run in public sector bank (PSB) stocks. Domestic mutual funds (MFs) were net sellers of PSB stocks for the first time in nine quarters, offloading shares worth Rs 1,800 crore in the March quarter, said a report by ICICI Securities. In the previous eight quarters, fund houses had invested more than Rs 10,000 in PSBs amid deep discounts in valuation vis--vis their private sector peers.
While the rupee snapped a four-session downslide, it rupee could not cement intra-day gains as RBI kept short-term lending (repo) and cash reserve ratio unchanged, forex dealers said.
Instead of only focusing on the tenure for which the best interest rate is available, investors should also focus on their own investment horizon.
'Three external members of the first MPC are respected researchers with excellent academic background, but there is no harm in considering academicians with diverse backgrounds such as finance and labour along with economists for this body,' recommends Tamal Bandyopadhyay.
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The worst performing Asian currency of the year so far hit a new life low of 61.80 rupees per dollar on Tuesday, breezing past a previous low of 61.21 hit on July 8. Central bank intervention helped the rupee recover, but by Wednesday it was sliding once again, to stand around 61.41 by 1.30 p.m.
Use this window to lock into bank FDs; unless govt cuts small savings rates, banks may not cut deposit rates
Das said that global economic activity has remained fragile and the surge in COVID-19 cases has subdued early signs of revival.
Currently, banks follow system of internal benchmarks, including Prime Lending Rate, Benchmark Prime Lending Rate, Base rate and Marginal Cost of Funds based Lending Rate.
While RBI is likely to cut repo rate by 25 basis points on Wednesday, the government is also expected to push reform initiatives like increasing FDI limit in insurance sector in the Budget session, it added.
Given the macro setting, the outlook remains positive for each of the four key parameters - inflation, current account deficit, fiscal deficit and currency stability, says Rahul Bhushkute.
RBI has, since January, cut its policy rate four times.
Tomorrow's review could also turn out be the last policy anchored by Rajan if the proposed Monetary Policy Committee (MPC) is put in place before the next review due on August 9.
Response to readers' queries on stocks they want to buy, sell or hold.
The bulk of an investor's portfolio should be in shorter-duration funds of up to one year portfolio duration.
Reserve Bank Governor Shaktikanta Das on Friday said the rupee is holding up relatively well when compared to the currencies of emerging market peers and advanced economies. Days after the domestic currency breached the 80-level against the dollar, Das said Reserve Bank of India (RBI) has zero tolerance for volatile and bumpy movement in the rupee and added that the central bank actions have helped in smoother movement. He said RBI has been supplying US dollars to the market to ensure adequate supply of liquidity and also clarified that the central bank does not target a particular level for the currency.
The Reserve Bank of India held its policy rate at 7.25 percent on Tuesday.
Moody's expect RBI to hold policy 'repo' rate steady to have a neutral stance in this growth
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.
The Reserve Bank of India kept its policy interest rate unchanged at a five-year low of 6.50 percent on Tuesday.
The Sensex is up 57 points at 14,269 in the opening trades
The Indian economy is likely to benefit from tailwinds from both monetary and fiscal policy in the coming month
'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.
Twelve of the 21 economists polled doubted whether the government could roll out the tax before the next fiscal year begins in April.
Rate cuts are unlikely to be aggressive, in our view.
RBI would get the comfort of meeting its 8 per cent January Consumer Price Index-based inflation target, BofA-ML said, adding that 'we expect the RBI to cut 75 bp in 2015 from February with inflation on course to 6 per cent in January 2016'.
'This is for the first time home loan rates have dropped below 7 per cent,' notes Tamal Bandyopadhyay.
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.
'We have a plan to plough back a 'This year in the first half we had profits of more than Rs 31,000 crore.' significant amount of profits this financial year.' 'We have seen this organic plough back of profit is one of best ways to support the equity of the bank.'
The RBI expects change, presumably commencing in the next Budget, but must hold its current view until this actually happens.
'Policy was more in line with the expectations.'
The recent run on the US-based Silicon Valley Bank (SVB) and the subsequent seizure of its assets by the regulators may have sparked a global wave of risk aversion, particularly for start-ups. However, the Indian banking sector is unlikely to be a victim of any contagion effects, said analysts. he bank, which played a big role in financing start-ups and technology players, faced stress after incurring huge losses on its holdings of US bonds, following the most-aggressive monetary tightening cycle by the Federal Reserve in around four decades.
The rating agency expects the Reserve Bank of India to continue its accommodative monetary stance.
Investors not comfortable investing directly may take the mutual fund route, where they get exposure to a diversified portfolio of bonds.
Next bi-monthly policy statement on September 30.
Bankers said high interest rate could make Indian economy sluggish given that inflation is around 5%
Costlier vegetables slowly pushed retail inflation, which had remained well within the Reserve Bank's comfortable level of 4 per cent during most part of 2019, peaked to more than three-year high of 5.54 per cent in November.
For existing investors, it may be prudent to redeem their current investments in gilt or dynamic schemes and invest it in short-term funds, if the exit load is not very high, advises Malhar Majumder.
The RBI has made serious attempts to improve fiscal deficit.
