An immediate RBI rate cut will lower lending rates for banks' MSME/retail/mortgage loans before the 'busy' industrial season ends in March.
Fintech companies believe that the impact of Reserve Bank of India's order last week on unsecured loans will be visible in six to 12 months and prompt them to diversify and strengthen their secured portfolio. Fintechs which source funds through banks or non-banking finance companies (NBFCs) are looking at quickly building their secured portfolio options to at least 40 per cent of their total portfolio. "Over the medium to long term, as part of our product strategy, we are evaluating secured products which can be enabled over a digital platform" said Yogi Sadana, the founder of Zype, a lending-focussed fintech.
The committee set up under Urjit Patel to revise the policy framework needs to re-examine the Reserve Bank's approach to monetary stability.
The Indian economy appears to have slowed down in 2018-19 due to lower private consumption, tepid growth in fixed investment and muted exports, a finance ministry report has said.
The Index of Industrial Production (IIP) grew by 1.4 per cent in November as most components like manufacturing, electricity, mining, primary goods, and consumer durables witnessed a slowdown, according to data released by the National Statistical Office (NSO) on Wednesday. This is on the base of a decline of 1.7 per cent in November 2020 and before the new Covid variant started impacting economic activity. IIP growth was lower than the 4 per cent expansion recorded in the previous month but was better than a 1.6 per cent contraction seen in November 2020. Separately, rising prices of kitchen staples pushed retail inflation, or rate of price increase, to 5.59 per cent in December 2021, bringing it close to the upper band of Reserve Bank's comfort zone.
Arguing that the recent elevation in retail inflation is not structural but supply-driven and therefore potentially transitory, a foreign brokerage report has forecast that the benign interest rate regime will continue at least until next June. The assessment comes a day ahead of the third bimonthly monetary policy review on Friday wherein it's widely expected that the monetary authority will leave the key rates unchanged at 4 per cent even though the consumer prices have been on remaining above 6 per cent since May and crude prices have been north of $70 a barrel for months.
Bajaj Finance was the top gainer in the Sensex pack, rising around 4 per cent, followed by Maruti, SBI, Bajaj Finserv, Sun Pharma and Asian Paints. NSE Nifty rallied 293.05 points to 17,469.75.
The former RBI deputy governor talked about the prospects of an economic revival, reforms in IMF, etc.
Tech Mahindra was the top gainer in the Sensex pack, rising over 3 per cent, followed by Dr Reddy's, PowerGrid, Kotak Bank, Sun Pharma, ICICI Bank and M&M. On the other hand, IndusInd Bank, Asian Paints, Maruti and Bharti Airtel were among the laggards.
FY22 will be the year to rebuild with the IMF projecting output growth at 11.5 per cent, economic survey at 11.0 per cent and the RBI's Monetary Policy Committee at 10.5 per cent.
The government on Friday appointed Suman K Bery as the vice chairman of Niti Aayog, following the sudden resignation of Rajiv Kumar.
'If rate cuts happen, bond yields will come down and investors will make mark-to-market capital gains on them.'
Firm Asian cues and a higher opening of European markets reflecting a rally on Wall Street, where all three US indices hit new records following strong economic data, bolstered trading sentiments here
RBI said the outlook for economic growth for 2016-17 has turned uncertain after the unexpected loss of momentum by 50 basis points in Q2 and the effects of the withdrawal of banned notes
Focus on inflation, higher CPI projection dampen bond market mood.
RBI Governor Raghuram Rajan on Tuesday kept the repo rate unchanged 6.50 per cent.
Equities went into a tailspin on Wednesday after the Reserve Bank surprised the market with a mid-cycle rate hike in a bid to tame soaring inflation.
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.
This is the 14th consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
Top Sensex gainers include Hero MotoCorp, Bajaj Auto, Asian Paints, IndusInd Bank, HUL, and Maruti, rallying up to 5.87 per cent. While, ICICI Bank, NTPC and ITC slipped up to 0.13 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.
The wholesale price-based inflation rose for the second consecutive month in February to 4.17 per cent, as food, fuel and power prices spiked. The WPI inflation was 2.03 per cent in January and 2.26 per cent in February last year. After witnessing months of softening of prices, the food articles in February saw 1.36 per cent inflation. In January it was (-) 2.80 per cent.
The biggest risk to India's growth outlook is an escalation of geopolitical tensions, especially if these tensions spread to the Asian region, RBI Monetary Policy Committee (MPC) member Jayanth R Varma said on Wednesday. Varma, in an interview to PTI, said that inflation and inflationary expectations appear to be moderating and high inflation will certainly not become the 'norm' in the country. He is cautiously optimistic about the Indian economy as after the pandemic abated, consumption demand has begun to recover though the recovery is uneven across sectors and industries.
Relations between the Mint Road and North Block have often been frosty, with the former's calls for lowering rates being the biggest point of difference
A likely easing in inflationary pressures in the forthcoming months will reopen the window for the RBI to once again prioritise growth and ease its interest rates.
Reserve Bank Governor Raghuram Rajan on Thursday said the central bank will continue its focus on taming inflation, speeding up resolution of distressed projects and ensuring enough capital for banks through balance sheet clean-up.
The government has extended the term of Reserve Bank of India Governor Shaktikanta Das by another three years upto December 2024, according to an official order.
Tata Steel was the top gainer in the Sensex pack, climbing 2.11 per cent, followed by Infosys, HDFC Bank, HDFC, Kotak Bank, M&M and PowerGrid. NSE Nifty jumped 142.05 points to end at 17,605.85.
This is the fifth straight cut in rates by the Reserve Bank of India in as much policy reviews in 2019, and takes the total quantum of reductions to 1.35 per cent.
Amendments to RBI Act likely soon
Jaitley said inflation has been under control for long and is likely to remain so on the back of good monsoon and unlikely spike in oil prices.
The Reserve Bank of India on Friday raised the retail inflation forecast for 2021-22 to 5.7 per cent due to supply side constraints, high crude oil and raw materials cost. The RBI in June had pegged the retail inflation estimate at 5.1 per cent for the current financial year. The RBI has the mandate to keep inflation in a band of 2-4 per cent, with a tolerance level of 2 per cent on either side.
'Some of the astounding proposals, if translated into statutory provisions, would be suicidal.' 'This would not be a wonder cure for increasing insurance penetration and only result in mushrooming growth of players like paan kiosks with deleterious consequences.'
In order to provide an impetus to digital funds movement, it has been decided to do away with the charges levied by the RBI for transactions processed in the RTGS and NEFT systems, RBI said.
The US Federal Reserve's interest rate decision, global market trends and trading activity of foreign investors are the major factors that would dictate terms in the equity markets in a holiday-shortened week ahead, analysts said. Equity markets will remain closed on Tuesday on account of Ganesh Chaturthi. From the global front, interest rate decisions from the Bank of England and Bank of Japan would also influence market trends.
The repo rate has been left unchanged at 4 per cent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank's MPC.
Three years after India declared its goal to become a net-zero economy by 2070, the policy design for achieving the target has begun, with the NITI Aayog forming dedicated multi-sectoral committees to prepare a transition plan. In 2021, India joined a select group of nations that set a target year for becoming net-zero carbon economy. At COP26 in Glasgow, Prime Minister Narendra Modi outlined a five-pronged 'Panchamitra' climate action target for India and committed to a net-zero target by 2070, joining nations like the US, the UK, and China.
The Union government could target a fiscal deficit of 5.8-6 per cent of nominal GDP for 2023-24, and it should continue its capital expenditure push and look to simplify the personal income tax regime, economists recommended Finance Minister Nirmala Sitharaman and her team during their pre-Budget interaction on Monday. Starting last week, Sitharaman had eight pre-Budget consultations this time. More than 110 invitees representing seven stakeholder groups participated in these meetings, the finance ministry said in a statement. The stakeholder groups included representatives and experts from agriculture and agro-processing industry; industry, infrastructure & climate change; financial sector and capital markets; services and trade; social sector; trade unions and labour organisations; and economists.
A rise in petrol and diesel consumption can help the government cut cesses on the fuels by Rs 4.5 a litre without impacting revenue collections of FY21, and help cool off the pressure on inflation, domestic rating agency ICRA said on Friday. Petrol consumption is estimated to increase 14 per cent in 2021-22 and diesel by 10 per cent on the lower base, rise in mobility and economic recovery, ICRA said. The rating agency added that it will result in an additional Rs 40,000 crore in revenue for the government through higher collections of the cess.
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