The Reserve Bank of India on Wednesday decided to keep the policy rate unchanged for the tenth time in a row but changed its stance to 'neutral' that may lead to a cut in the forthcoming policies. RBI maintained status quo despite the US Federal Reserve lowering the benchmark rates by 50 basis points last month.
Weak consumer sentiment across urban and rural markets due to slow farm inflows, subdued agri-commodity prices, rising cost of ownership as a result of regulatory changes including safety, emissions, vehicle registration, along with a rise in interest cost/EMI, have impacted demand.
'There is no immediate threat to the government, and they would prefer the growth agenda.'
Credit rating agency ICRA expects interest rates in the Indian economy to harden, which together with a slowdown in agriculture growth, will put pressure on industrial activity and profitability of the banking sector.
Equity-focused schemes may perform better in a bull market, while debt-oriented ones may offer greater stability during volatile periods.
The government has slashed by up to 20 per cent the supplies of cheaper domestically produced natural gas to city retailers -- a move that may result in Rs 4-6 per kg hike in the price of CNG sold to automobiles, unless excise duty on the fuel is cut, sources said. Natural gas pumped from below the ground and from under the seabed from sites ranging from the Arabian Sea to Bay of Bengal within India is the raw material that is turned into CNG for sale to automobiles and piped cooking gas to households.
The Reserve Bank is unlikely to cut the benchmark interest rate in its forthcoming bi-monthly monetary policy review later in the week as retail inflation is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts.
Rating agency Icra has revised down its GDP growth estimate to 5.7 per cent, citing absence of concrete improvements in the investment sentiment, weaker monsoon and a likely rise in inflation, which limit RBI's room to spur the growth by cutting rates.
The eight key infrastructure sectors' growth rose by 6.3 per cent in May on healthy expansion in the production of coal, natural gas, and electricity, though the growth rate is lower than in April, according to official data released on Friday. The production of the eight sectors grew 6.7 per cent in April. The growth of these core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity -- was 5.2 per cent in May 2023.
Credit rating agency ICRA is unlikely to revise its rating for ICICI Bank, but said it has 'taken note of the recent pressure' on the bank following panic withdrawal by depositors in some parts of Gujarat and Mumbai.
The small finance bank model may still be testing the water some 10 years since its launch. According to banking experts, the regulator has taken a cautious approach in granting approvals. Unity Small Finance Bank was the last one to get a licence in the category in November 2021.
The wholesale inflation rose to a 13-month high of 1.26 per cent in April fuelled by rising prices of food articles, especially vegetables, amid expectations of RBI holding interest rates in the policy review next month. The wholesale price index (WPI) based inflation has been rising for two months in a row.
Global rating agency Moody's Investors Services plans to partially outsource certain services including monitoring of mutual funds of Europe and emerging economies, from Indian rating agency ICRA.
India's economic growth slowed to a 15-month low of 6.7 per cent in April-June 2024-25, mainly due to poor performance of the agriculture and services sectors, government data showed on Friday. The gross domestic product (GDP) expanded by 8.2 per cent in the April-June quarter of 2022-23. India, however, remained the fastest-growing major economy, as China posted a 4.7 per cent growth in April-June 2024.
Retail inflation increased to four-month high of 5.08 per cent in June as food items, including vegetables became dearer, according to government data released on Friday. The Consumer Price Index (CPI) based retail inflation was on a decline since January, before rising again in June. The CPI-based retail inflation was 4.8 per cent in May 2024 and 4.87 per cent in June 2023.
In view of the rising number of mobile and internet banking users, the Reserve Bank of India (RBI) has proposed to tighten norms related to the liquidity coverage ratio (LCR) by increasing the run-off factor for retail deposits. "Banking has undergone rapid transformation in recent years. "While increased usage of technology has facilitated the ability to make instantaneous bank transfers and withdrawals, it has also led to a concomitant increase in risks, requiring proactive management," the RBI said in the draft guidelines released on Thursday.
With concern on food inflation ebbing with the monsoon progressing well, the Reserve Bank of India (RBI) is warming up to the idea of a change in stance to "neutral" from "withdrawal of accommodation", according to economists. In his speech on Thursday during the annual event of the Federation of Indian Chambers of Commerce and Industry-Indian Banks' Association, RBI Governor Shaktikanta Das said: "The balance between inflation and growth is well-poised."
In three separate but similarly-worded orders, Sebi said the default by IL&FS occurred due to "lethargic indifference and needless procrastination and laxity" of the rating agencies.
Even as the government debates whether to continue the FAME-II subsidy for electric vehicles (EVs), the share of such vehicles in overall sales is decelerating, after witnessing a heady growth in the first few years. The penetration of EVs - electric two-wheelers, passenger vehicles, three- wheelers and other segments collectively - in the first 10 months of FY24 has been pegged at 4.3 per cent, compared to 3.7 per cent in FY23, according to credit rating agency ICRA.
Indicating good corporate profile and continuing phases of recovery, credit rating agency ICRA on Tuesday said there were substantial decline in downgrades and robust increase in upgrades, notably in the automobile sector during 2003.
The rise of startups and a thriving entrepreneurial culture in Tier-II and Tier-III cities is contributing to the increasing sales of high-end cars.
The growth of eight key infrastructure sectors rose to 5.2 per cent year-on-year in March due to improvement in the output of crude oil, cement and electricity, according to official data released on Tuesday. In 2023-24, the growth rate in the output of these eight sectors was 7.5 per cent, marginally down from 7.8 per cent recorded in the year-ago period.
The government's move to tweak the long-term capital gains (LTCG) tax regime proposed in the Finance Bill 2024 and re-introduce the indexation benefit is likely to boost the investments and spur housing sales in the country, industry executives believe. "By enabling taxpayers to choose the lower tax burden between the new and old schemes, the amendment is poised to drive investment and enhance sales across housing segments," said Niranjan Hiranandani, chairman of the Hiranandani Group. In Budget 2024, Union Finance Minister Nirmala Sitharaman proposed an overhaul in the capital gains tax regime, including lowering the LTCG tax to 12.5 per cent from 20 per cent.
Banks reported muted treasury gains during April-June of FY25 (Q1FY25) following Reserve Bank of India's (RBI's) revised norms on investment portfolio effective from April 1, 2024, despite softening of government bond yields. "Banks have reported muted treasury gains during Q1 of FY25 despite softening of yields across the curve. "The main reason was change in the investment valuation and classification guidelines by the RBI.
India may have to lean more on West Asian nations for supplies of liquefied petroleum gas (LPG), a cooking fuel, in the coming years after Indian state-run refiners drew up big plans to diversify into producing more profitable petrochemicals. This shift leads to reduced LPG output, Indian refining executives said. The mantra for state-run oil companies, from Indian Oil Corporation (IndianOil) to liquefied natural gas (LNG) importer Petronet LNG, which are looking to diversify their businesses from lower-margin fuels, has been value-added petrochemicals.
The company has finalised a three year business plan to increase revenue and control costs.
On the back of robust tax collection, the ratio of direct taxes to gross domestic product (GDP) this financial year is likely to be the highest in this century so far. This, along with strong goods and services tax (GST) collection, may drive up receipts from central taxes as a proportion of GDP to the highest level or close to the highest since 2008-09 despite subdued excise and customs duty receipts. This will be due also to lower nominal GDP projected in the first advance estimates for 2023-24.
The government on Tuesday proposed reducing the long-term capital gains tax on immovable properties to 12.5 per cent from 20 per cent, but removed the indexation benefits to adjust for inflation, a move experts termed as "negative" for sellers.
Investors pumped in a record Rs 40,608 crore into equity mutual funds in June, 17 per cent higher than in May 2024, industry body Amfi said on Tuesday. The flows into the systematic investment plans (SIPs) also reached a new high at Rs 21,262 crore for the month, which was higher than the previous high of Rs 20,904 crore recorded in May, it said. The net assets under management (AUM) for the entire MF industry on equity schemes stood at Rs 27.67 lakh crore, while the same from SIPs was Rs 12.43 lakh crore, the body said.
The country's real GDP growth in the first quarter will be better than the Reserve Bank's estimate of 8 per cent, economists said on Tuesday. Economists at the country's largest lender SBI pegged the growth at 8.3 per cent while domestic rating agency Icra estimated it to come even higher at 8.5 per cent. The Reserve Bank of India (RBI), which expects the GDP to grow at 6.5 per cent in FY24, has estimated a growth of 8 per cent in the April-June period.
India's three-wheeler exports, which have been on a downhill trajectory over the past few years, are showing no signs of recovery in FY25, with key markets like Sri Lanka, Bangladesh, Nigeria, and Egypt witnessing subdued demand. In May, the country's exports plummeted 11.3 per cent year-on-year (Y-o-Y).
India recorded a current account surplus of $5.7 billion or 0.6 per cent of GDP in the March quarter, the Reserve Bank of India said on Monday. This is the first time in ten quarters that the crucial metric of the country's external strength has turned into surplus mode. In the year-ago period, the current account deficit stood at $1.3 billion or 0.2 per cent of GDP, and the same was $8.7 billion or 1 per cent of GDP in the preceding quarter ending December 2023.
Says operating environment for Indian corporate sector has improved during FY15
A cocktail of heatwave and upcoming cricketing events is expected to usher in the peak season for the country's largest beer maker, United Breweries. The beer maker, which has gained share in some key markets, will be a major beneficiary as April to July is an important period contributing to 40-45 per cent of its annual beer volumes. Going ahead, the T20 Cricket World Cup in June and the ongoing IPL will have a positive impact on volumes and should be able to offset the negative impact of elections on sales, experts believe.
Anaysts recommend a 'buy' on Icra due to its positive outlook.
Anaysts recommend a 'buy' on Icra due to its positive outlook.
Credit rating agency ICRA on Tuesday lowered economic growth projection for the Indian economy to 6.3 per cent this fiscal from its earlier forecast of 6.5-6.7 per cent due to an expected fall in farm output. \n
The two-wheeler segment has shown signs of recovery in the first half (H1) of calendar year (CY) 2024, largely driven by improving performance in rural areas. According to the Federation of Automobile Dealers Associations, rural contribution to two-wheeler sales surged by 57-60 per cent in the April-June quarter of 2024-25, indicating a rising demand in these regions. Experts believe that this trend will continue, supported by a favourable monsoon season and government initiatives aimed at rural development.
Interest on home loans is likely to remain low and the share of banks in the overall mortgage market is set to rise in the medium term.
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