Many analysts over the past week have said the RBI has legroom to cut rates to the tune of 65 bps by June and some like Barclays and BofA have also spoken about the likelihood of an inter-meeting cut.
Financials were among the top losers along with Sun Pharma and index heavyweight Reliance Industries
The bigger worry is that its effects could linger well into the next financial year.
The rate of price rise in the vegetable segment almost doubled to 7.47 per cent as against 3.92 per cent in September.
In a double delight, retail inflation eased to a one-year low of 5.72 per cent - staying below the upper tolerance limit for two months in a row, while factory output rose sharply to 7.2 per cent on the back of healthy growth in manufacturing. The retail inflation numbers based on Consumer Price Index (CPI) will provide some room for the Reserve Bank to further moderate the quantum of hike in key interest rate or even press a pause button. The RBI has been on a rate hiking spree since May 2022 in its bid to tame inflation, having raised the repo rate by a cumulative 225 basis points (bps).
Urjit Patel's reappointment will raise market hopes that Rajan, will also be offered an extension when his tenure ends in September.
Armed with necessary macro and micro growth drivers, India is on its way to becoming the fastest growing major economy in the world, a finance ministry report said. Rapid vaccination and teeming festivities will push India's ongoing recovery resulting in narrowing of demand-supply mismatches and greater employment opportunities, as per the monthly Economic Review prepared by the ministry.
India's services sector activity moderated further in January as new business rose at a noticeably slower rate amid the escalation of the pandemic, reintroduction of restrictions and inflationary pressures, a monthly survey said on Thursday. The seasonally adjusted India Services Business Activity Index fell to 51.5 in January, down from 55.5 in December, pointing to the slowest rate of expansion in the current six-month sequence of growth. For the sixth straight month, the services sector witnessed an expansion in output.
The main factor boosting production was a sustained rise in new work inflows.
The industrial output for the third month in a row remained in the negative territory, contracting 1.5% in January
The new rates, effective Wednesday, is the third reduction by SBI in this financial year having cut the rates by 5 bps each in April and May, while its home loan rates has come down by 20 bps during this period.
From the Sensex pack, Tata Motors, Sun Pharma, Wipro, Tata Consultancy Services, UltraTech Cement, Tech Mahindra, Bajaj Finserv, HCL Technologies, Infosys and IndusInd Bank were the major laggards. NTPC, Power Grid, Reliance Industries, Tata Steel, HDFC and HDFC Bank were the major winners.
Instead of only focusing on the tenure for which the best interest rate is available, investors should also focus on their own investment horizon.
Fitch Ratings had in December affirmed India's 'BBB-' rating with a stable outlook.
RBI could opt for a 'deep cut' after winning inflation war, say experts.
Services sector activities improved further and touched a five-month high in April driven by a surge in incoming new work orders that boosted business activity and supported a renewed increase in employment, according to a survey. The seasonally adjusted S&P Global India Services PMI Business Activity Index jumped to 57.9 in April, from 53.6 in March, highlighting a sharp rate of expansion that was the fastest since last November amid mounting price pressures. For the ninth straight month, the services sector witnessed an expansion in output.
If this turns into reality, India's gross domestic product (GDP) growth will be the lowest since 2012-13, which could severely hit job creation and income growth in the near term.
As per the RBI Act, the central bank should have four deputy governors - two from within the ranks and one commercial banker and the fourth one an economist to head the monetary policy department.
Rating agencies Crisil and Icra on Monday revised down their India growth projections for the current fiscal and the second quarter mainly due to the ripple effect of slowdown in global growth and mixed crop output. Crisil downgraded the India growth forecast by 30 bps to 7 per cent while Icra pegged the economic expansion at 6.5 per cent for the second quarter of FY2022-23. "We have revised down our forecast for real gross domestic product growth to 7 per cent for fiscal 2023 from 7.3 per cent, primarily because of the slowdown in global growth that has started to impact our exports and industrial activity.
India's economy will do well once vaccination reaches a critical mass as pent up demand, global recovery and easy financial conditions will boost activities, RBI's Monetary Policy Committee (MPC) member Ashima Goyal said on Tuesday.
Heading to the third year, will Urjit Patel be busy firefighting a currency crisis? Almost no governor of the RBI managed to evade it and Patel perhaps knows it.
The imported inflation component is also expected to ebb on lower oil prices and softer US dollar, it said.
A combination of farm loan debt waivers by state governments and the implementation of the pay commission award could entail some fiscal slippages and pose a risk to inflation
The Reserve Bank of India (RBI) on Wednesday announced to increase the policy repo rate by 50 basis points to 4.9 per cent, the second hike in five weeks aimed at quelling the inflation. The MPC vote was unanimous and has decided to keep stance withdrawal from accommodative, RBI Governor Shaktikanta Das said in a press conference on Wednesday. The decision was taken during a three-day meeting of the RBI's Monetary Policy Committee (MPC) to review the interest rates in the country. The MPC voted unanimously to increase the policy repo rate by 50 bps to 4.90 per cent," Das said.
RBI Governor Raghuram Rajan, who today surprised markets with a rate hike, defended the move saying a rate cut would not have impacted either banks or borrowers and that bringing down retail prices is the key to sustainable growth.
A two-year extension at the helm of the RBI still looks a real possibility
Rajan also did his bit by taking steps to protect the currency against speculative attack as did the government in curbing gold imports and bringing the Current Account Deficit
Coal India topped the losers' list in the Sensex pack on Tuesday, falling 2.36 per cent, followed by Bharti Airtel at 2.16 per cent.
Banks have raised concerns over the new international trade settlement in rupee, fearing that facilitation of such a mechanism could result in them facing the ire of economic sanctions by the West, people aware of the matter said. Large banks with overseas operations have sought clarity and assurance from the Reserve Bank of India (RBI) that they will not be targeted with sanctions for facilitating rupee trade with a sanction-hit country such as Russia. The present payment mechanism is a shift from earlier such arrangements, like the one with sanction-hit Iran, which involved banks facilitating settlement of international trade that did not have business in the sanctioned nation.
The resignation is sure to create more political firestorms for the government as it comes on the eve of the winter session of Parliament where the Opposition has already made it clear to the treasury benches that infringing on the RBI autonomy would be a big talking point for them.
'We are very watchful about inflation and growth. But the main challenge is economic revival and growth.'
The trade gap was $11.66 billion in December 2015 while in September 2015 it stood at $10.16 billion
The wait for India to become a $5-trillion economic powerhouse by 2024-25 (FY25) is going to take longer than what the finance ministry had originally intended, according to the International Monetary Fund (IMF). The vision will instead be achieved in 2028-29 (FY29), reveals the IMF data, illustrating a four-year delay. Chief Economic Advisor (CEA) V Anantha Nageswaran had in February said India would become a $5-trillion economy by 2025-26 or the following year, on the back of 8-9 per cent sustained growth rate in real gross domestic product (GDP). However, the IMF data conveys that the economy will be $4.92 trillion in FY28, clearly alluding to the fact that the target will be realised in FY29.
Arvind Subramanian was appointed CEA in October 2014 and got a year's extension in September 2017
Progress on monsoons along with favourable base effect in 2HFY2017 continues to point towards RBI achieving its near 5 per cent inflation target by the year-end
Top gainers in the Sensex pack included Yes Bank, TechM, Bajaj Finance, Bharti Airtel, Maruti, Asian Paints and Hero MotoCorp - rising up to 5.30 per cent. The 50-share Nifty ended 85.65 points, or 0.79 per cent, higher at 10,948.25 points.
Raghuram Rajan called for purposeful and effective action to counter the atmosphere of cynicism, which has slowed down the decision making process.
Tuesday's policy announcement had a regulatory and development component.
'There will be no serious effect on Indian economy because one person, one man, however powerful, however influential, however great, cannot have an impact on an economy as big and complex as India.'
We need a change in mindset, says the RBI Governor.
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