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 elements are in place for another strong year.
On the Sensex chart, Yes Bank was the worst hit with 7.81 per cent decline. It was followed by Tata Steel, Vedanta, M&M, IndusInd Bank and Tata Motors -- shedding as much as 5.07 per cent.
The view among the regulator and the government is that the currency is overvalued
Tata Motors drove the Sensex rally for the second session in a row, surging over 8 per cent. Other top gainers were Bharti Airtel, TCS, Bajaj Finance, PowerGrid, IndusInd Bank and State Bank of India -- rising as much as 5 per cent.
The Reserve Bank of India on Friday raised the benchmark lending rate by 50 basis points to 5.40 per cent to tame inflation.
Retail inflation dropped marginally to 7.01 per cent in June mainly due to slight easing in prices of vegetables and pulses, though it still remained above the Reserve Bank's comfort level for the sixth month in a row. The consumer price index (CPI) based inflation stood at 7.04 per cent in the preceding month of May and 6.26 per cent in June 2021. Inflation in the food basket in June 2022 was 7.75 per cent, compared to 7.97 per cent in the previous month, as per the National Statistical Office (NSO) data released on Tuesday.
'The recent US jobs report has eased fears of a hike in the Fed meeting.'
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.
The argument for a weaker rupee is substantial.
The central bank will appear vacuous if it holds fire next week following its ultra hawkish guidance at the last monetary policy review.
In the last five years, price increases of global commodities, especially those of oil, metal and food, budget deficits widened and trade balances worsened. With this, the growth softened and inflation reached double digits.
India's services sector activities improved further and expanded at strongest rate in over 11 years in May, supported by a substantial pick-up in new business growth, even as input cost inflation climbed to a record high, a monthly survey said on Friday. The seasonally adjusted S&P Global India Services PMI Business Activity Index jumped to 58.9 in May, up from 57.9 in April, amid better underlying demand and strong inflows of new work. For the tenth straight month, the services sector witnessed an expansion in output.
Retail inflation rose 4.38 per cent year-on-year in November, the slowest pace in data going back to January 2012.
'We are not entirely out of the woods.' 'The broader trajectory remains tentative.' 'However, we may expect some near-term bounce.'
This is the biggest one-day fall in the rupee since August 3, 2016
The man widely expected to be India's next central bank chief favours clipping the autocratic power of the role and giving more say to a monetary policy committee.
"GDP growth in India eased to a still strong 8.7 per cent in 2007, from 9.7 per cent in 2006, and is projected to slow further to 7 per cent in 2008," said the World Bank report on Global Development Finance released on Tuesday. World Bank attributed the moderation in GDP to 'monetary tightening in 2007 (that) led to softening in domestic demand'.
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.
Historically, March has been a volatile month for Indian equity markets. To begin with, it marks the end of a financial year, wherein there is some compulsive portfolio rebalancing trade by large funds - domestic and foreign. Retail investors, too, prefer to 'cash in' on their gains and losses before the financial year runs out.
'Although mid- and small-cap funds have the potential for higher growth, they come with inherent higher volatility.'
In terms of magnitude of rate cuts, Morgan Stanley expects 50-100 basis points of policy rate cuts in 2015, depending on the inflation trajectory, which in turn will be dependent on the trend in commodity prices, fiscal deficit and rural wage growth.
The country's foreign exchange reserves crossed the $600 billion mark for the first time after increasing by $6.842 billion in the week ended June 4, RBI data showed on Friday. The reserves surged to a record $605.008 billion in the reporting week, helped by a rise in foreign currency assets (FCA), a major component of the overall reserves, as per weekly data by the Reserve Bank of India (RBI). In the previous week ended May 28, 2021, the reserves had swelled by $5.271 billion to $598.165 billion.
It is a wonder how pervasive and long-lasting the damage can be from a balance-sheet crisis, says Suman Bery.
The broader markets traded higher with mid-caps and small-caps gaining 0.2-0.3 per cent on the BSE.
FII inflows subdued, investor sentiment remains sombre abroad
Nitin Jain, head, capital markets (individual clients) for Edelweiss Financial Services, talks about the uncertain economic environment and what investors could do.
Forecasters' survey puts GDP growth at 6.8 per cent in the current financial year, 6.3 per cent next year. In its quarterly report ahead of the monetary policy review on Tuesday, RBI added that the risks to inflation had come down significantly due to the softening in international food and oil prices.
In view of the current global financial meltdown, the Reserve Bank on Tuesday said it is holding back plans for liberalising the operation of foreign banks in the country.
The Bombay Stock Exchange's 30-share Sensex closed at 19,504 up 117 points. The National Stock Exchange's 50-share S&P CNX Nifty closed up 26 points at 5,930.
The Reserve Bank may go for a final 25 basis points increase in the current rate hike cycle next week and a reduction would come in only by the end of third quarter of FY24, economists at Axis Bank said on Wednesday. As per media reports, RBI officials met economists on Tuesday, and the latter have suggested the central bank to go for a 25 basis points hike in key rates. Since May 2022, the RBI has hiked rates by 250 basis points, hurting borrowers and some are already concerned about loan tenors extending beyond their working lives as a result of the hikes.
Of the eight RBI governors who have held office since the 1991 economic liberalisation, Bimal Jalan had the longest stint and S Venkitaramanan, the shortest. Current Governor Shaktikanta Das will overtake Bimal Jalan before completing his second term in December, points out Tamal Bandyopadhyay.
M V Subramanian says there is an imperative need for collective responsibility to tackle inflation, prices and availability of essential commodities, and not rely on inflation targeting alone.
Hailing the announcement of Raghuram G Rajan as the new RBI Governor, India Inc on Tuesday said the appointment of the former IMF Chief Economist will help bring the economy back on growth path.
RBI lowers GDP forecast for FY16 to 7.4%
Fresh dollar demand from importers and some banks on the back of smart rise in the US dollar ahead of RBI monetary policy meeting on Tuesday also weighed on the rupee, said forex dealers.
Investors may take a 5 to 10 per cent exposure to silver. 'Have a long-term investment horizon when investing in silver ETFs to ride out short-term market fluctuations.'
Lower crude oil prices and a rally in domestic equities restricted the losses to some extent, forex dealers said. At the interbank foreign exchange market, the domestic currency opened weak at 79.50 per dollar.
