Prices of food items like cereals, pulses, and edible oils rose or remained steady in May, a Reserve Bank of India (RBI) report said, indicating there could be another higher inflation print. However, it observed that the Monetary Policy Committee's (MPC's) surprise move to increase interest rates bodes well for its credibility. The RBI's monthly State of the Economy report, released on Tuesday, citing high frequency food price data from the Ministry of Consumer Affairs for the period May 1-12, said the increase in the prices of cereals was primarily because of the surge in wheat prices.
India's political infighting is denting business confidence.
Elections may be a few months away, but the government may get into election mode much earlier than that, predicts A K Bhattacharya.
Those who want to invest should consider their risk appetite. Youngsters may go for it as they have a longer horizon to recover from a setback.
Governor Urjit Patel and his deputies spoke to the media about the central bank's decision to raise the repo rate.
Only investors with a higher risk appetite should enter these funds.
Infosys was the top gainer in the Sensex pack, rising over 2 per cent, followed by Bajaj Finance, HCL Tech, Tata Steel, Tech Mahindra and NTPC. On the other hand, Maruti, Sun Pharma, HUL and ITC were among the laggards. Nifty rose 122.15 points to 17,343.55.
What stood out in his 15-year journey as a member of the political executive at the Centre was his glowing record as India's most successful and effective finance minister. Both as prime minister and finance minister, he understood the importance of gradualism, except when the economy or the polity was in a crisis.
The minutes of the December MPC meet reveal members felt the current spike in the headline inflation rate was due to a temporary supply shock on the food front, expected to moderate by the second quarter of 2020-21.
India decisively withstood global headwinds in 2023 and is likely to remain as the world's fastest-growing major economy on the back of growing demand, moderate inflation, stable interest rate regime and robust foreign exchange reserves. Despite widespread pessimism witnessed among the developed nations and the worsening geopolitical situation, India recorded a gross domestic product (GDP) expansion of 6.1 per cent in the March quarter. The growth moved up to 7.8 per cent in the June quarter and was 7.6 per cent in the September quarter. For the first six months of this fiscal, the growth was 7.7 per cent.
CRR remains unchanged at 4%; first repo rate cut since May 2013.
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.
'With China falling out of favour, India is where investors see the demographic and digital dividend apart from the benefits of reforms playing out.' 'Your prime minister has also done a great job of sharing this story with the world.'
A freebie once granted can hardly be discontinued. All that can happen is to substitute it with a bigger freebie, notes A K Bhattacharya.
However, growth is expected to bounce back to an average of 7.3 per cent in the second half of 2017 and 7.7 per cent in 2018
Rajan had cautioned against any deviation from the fiscal discipline path.
The first major aspect is that of the veto power to the governor.
Linking all new floating rate loans to an external benchmark won't impact existing borrowers, so customers who have taken long-term home loans recently should watch things carefully, say Joydeep Ghosh and Sanjay Kumar Singh.
A weak dollar overseas also aided the rupee rise while fresh sell-off by foreign funds in domestic stocks capped the currency's gains, forex dealers said.
The rate hike in the future is set to be 'calibrated and cautious'.
Following are comments from economists at leading financial institutions, banks and rating agencies on the interim Budget:
'Government of India has the right to give directions to RBI'.
A healthy growth in India's services segments has helped the country's total exports and imports of goods and services to cross the $800 billion mark during the first half of 2023, despite a slowdown in global demand, think tank GTRI said in a report on Monday. According to the analysis of the Global Trade Research Initiative (GTRI), exports of goods and services rose by 1.5 per cent to $385.4 billion during January-June this year, as against $379.5 billion in January-June 2022. Imports, however, dipped by 5.9 per cent to $415.5 billion during the six months of this year, as against $441.7 billion in January-June 2022.
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.
Rajan said that even though inflation has breached the 6 per cent mark as against the RBI target of getting it down to 5 per cent by March 2017, the price rise scenario will ebb in future
It would be a good idea to create independent oversight committees for each regulatory institution and indeed, even for their appellate bodies, says A K Bhattacharya.
Minutes of the MPC meeting show Das felt economy needs more monetary stimulus as inflation outlook remains uncertain.
The banking system's liquidity slipped into deficit for the first time in the current financial year (2023-24) due to the imposition of the Incremental Cash Reserve Ratio (I-CRR) for banks and outflows from goods and services tax (GST) payments, according to dealers. Reserve Bank of India (RBI) data shows it injected Rs 23,644 crore on August 21. The last time liquidity was in deficit was on March 27, when the RBI injected Rs 45,575 crore.
A panel has recommended that the RBI should bring down CPI inflation to 4 per cent.
If imputed inflation for April and May is used, then you have inflation of over 6 per cent for two consecutive quarters, which is a worrying signal for the RBI.
Among the Sensex firms, Bajaj Finance emerged as the biggest gainer by climbing 2.95 per cent. Tata Motors, Bajaj Finserv, IndusInd Bank, Sun Pharma, Mahindra & Mahindra, State Bank of India, Larsen & Toubro, HDFC, HDFC Bank, Maruti, Reliance Industries and Bharti Airtel were the other major winners. HCL Technologies, Axis Bank, ICICI Bank, Tech Mahindra and Titan were among the laggards.
Thanks to Rajan we are an inflation-targeting country now
Kotak Mahindra Bank was the biggest loser from the Sensex pack, skidding 1.83 per cent, followed by Axis Bank, NTPC, Hindustan Unilever, ICICI Bank, Bharti Airtel, Reliance Industries, HCL Technologies, IndusInd Bank and Nestle. In contrast, Bajaj Finance, Bajaj Finserv, Tech Mahindra, Tata Consultancy Services, Titan, Infosys, HDFC Bank, HDFC and ITC were the gainers.
RBI is closely monitoring monsoon.
The RBI has doubled the limit of maximum balance that an individual customer can hold with payments banks to Rs 2 lakh from Rs 1 lakh earlier with immediate effect to expand the ability of such lenders to cater to the needs of MSMEs and other businesses.
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.
'If rate cuts happen, bond yields will come down and investors will make mark-to-market capital gains on them.'
Urjit Patel's reappointment will raise market hopes that Rajan, will also be offered an extension when his tenure ends in September.
Reversal in the declining economic growth trajectory is clearly the need of the hour and all steps should be taken to bring about this change.
Analysts expect the central bank to remain watchful of inflation.
