Crisil Research expects retail inflation to rise 60 basis points to 4 per cent this fiscal from 3.4 per cent in 2018-19.
The supply-side driven inflationary pressures, from food or fuel prices, would be mitigated by a neutral stance and a prolonged pause on rates, says Gaurav Kapur.
The economy is gaining traction with gradual pick up in manufacturing activity and moderation in contraction of services, spurred by comfortable liquidity conditions, an RBI article on Tuesday said. Observing that the retreat of the second wave of coronavirus pandemic has been slow, the RBI in an article on the 'State of Economy' said, the aggregate demand conditions are buoyed by the release of pent-up demand post unlock, while the supply situation is improving with the monsoon catching up to its normal levels and sowing activity gaining pace. "Reaffirming the traction that the economy is gaining, the manufacturing activity is gradually turning around, while contraction in services has moderated.
The S&P BSE Midcap and the S&P BSE Smallcap indices added 0.5% and 0.7%, respectively
In case the repo rate keeps trending downwards, borrowers can expect a downward revision of their MCLR-linked loans.
The Indian services sector activity fell to a six-month low in September, as new business inflows rose at the slowest rates since March, amid inflationary pressures and competitive conditions, a monthly survey said. The seasonally adjusted S&P Global India Services PMI Business Activity Index fell to 54.3 in September, from 57.2 in August, highlighting the weakest rate of expansion since March. For the fourteenth straight month, the services sector witnessed an expansion in output. In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
The rupee plunged 58 paise to close at an all-time low of 81.67 (provisional) against the US dollar on Monday as the strengthening of the American currency overseas and risk-averse sentiment among investors weighed on the local unit. Moreover, escalation of geopolitical risks due to conflict in Ukraine, a negative trend in domestic equities and significant foreign fund outflows sapped investor appetite, forex traders said. At the interbank foreign exchange market, the local currency opened at 81.47, then fell further to close at an all-time low of 81.67 against the American currency, registering a decline of 58 paise over its previous close.
Inflation in food articles during May stood at 1.13 per cent, as against 2.55 per cent in April.
One incident should not be used to generalise the health of all cooperative banks, says RBI governor Shaktikanta Das.
RBI Governor Shaktikanta Das said the central bank saw economic growth slowdown in February, prompting it to cut rates ahead of the curve and wondered why markets were surprised with the decision to pause rate reduction. Noting that there is a need for an "informed and objective discussion" on the country's economy, Das said the RBI would do "whatever is necessary" to address growth slowdown, spikes in inflation as well to ensure good health of banks and non-bank lenders. The apex bank went for five consecutive rate cuts starting in February this year, making it a cumulative reduction of 1.35 per cent.
RBI said at the current juncture, the all-out effort is to maintain and sustain, with the hope that when life is secure, resources, energy and time can be marshalled to rebuild and revive.
Expressing serious concern over contraction in industrial output in November, India Inc called for immediate policy interventions, including a rate cut by RBI, to prevent job losses and boost demand.
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.
India's services sector output growth touched a three-month high in November as business inflows rose markedly amid accommodative demand conditions, a monthly survey said on Monday. The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from 55.1 in October to 56.4 in November, indicating a sharp increase in output that was the quickest in three months even amid higher operating expenses. Survey participants linked the latest expansion to demand strength, successful marketing and a sustained upturn in sales.
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
Stressed MSME borrowers would be eligible for restructuring of debt, if their accounts were classified standard.
Banks seems to be upset over RBI's move over rate cut.
As inflation rate is near the upper limit of the comfort zone, experts rule out rate cuts anytime soon
Economists and investors want RBI to retain independence in setting rates
India's macroeconomic situation is improving fast and the country's GDP growth will turn positive in the third and fourth quarters of the current financial year, eminent economist Ashima Goyal said on Sunday. Goyal in an interview to PTI said the management of the COVID-19 pandemic and gradual unlocks announced by the government have helped in avoiding multiple COVID-19 peaks. The growth estimates by different agencies are being continuously revised, she said.
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.
The career bureaucrat-turned-central banker walked into the 19th floor corner room of the Reserve Bank on December 12, 2018. Since February 2019, the Das-led RBI has cut the repo rate by a whopping 135 basis points to support the sagging growth, including an unprecedented 35 bps reduction in August. As he completes one year at the helm, woes in the NBFC sector, overall health of the banking sector and steeply falling economic growth are among the major challenges that needs to be tackled sooner than later.
Slowdown in industrial production notwithstanding, a marginal increase in inflation raised the clamour for another round of rate cut by the Reserve Bank on April 4 to boost economic activity.
Reserve Bank of India (RBI) Governor Raghuram Rajan's decision to cut rates last week surprised even top officials.
In the current fiscal so far, retail inflation stabilised around 5 per cent, while wholesale price-based inflation averaged around 2.9 per cent during April-December.
The government hopes the latest action will lead to banks also lowering the cost of borrowing for corporate and individual borrowers.
Urjit Patel's reappointment will raise market hopes that Rajan, will also be offered an extension when his tenure ends in September.
The government's total liabilities rose to Rs 128.41 lakh crore in December quarter from Rs 125.71 lakh crore in the three months ended September 2021, according to the latest public debt management report. The increase reflects a quarter-on-quarter increase of 2.15 per cent in October-December 2021-22. In absolute terms, the total liabilities, including liabilities under the 'Public Account' of the government, jumped to Rs 1,28,41,996 crore at the end of December 2021.
investors will look to the new governor to continue the banking sector clean-up with the same urgency as Mr Rajan, who was targeting fully cleaned-up and provisioned balance sheets by March 2017
However, it may still not change its stance on the policy rate as inflationary pressures are coming from high commodity prices.
Domestic macroeconomic data, RBI policy and developments related to the Russia-Ukraine war would be major driving factors for the stock market this week, analysts said. Moreover, FPI investment and trends in crude oil would also influence the trading sentiment, they added. "This week, the RBI credit policy will be a critical factor for Indian markets.
The recovery in the Indian services sector was sustained in November as new work orders supported business activity growth and the first rise in employment in nine months, a monthly survey said on Thursday.
There is so much liquidity in the system, in the global economy, and that's why the stock market is very buoyant. It will certainly witness correction in the future: RBI's Das.
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.
Probably in August. We can argue whether RBI is dovishly neutral or neutrally dovish but the telltale signs of at least one more rate cut are strewn all over the policy statement, points out Tamal Bandyopadhyay.
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.
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.
The industrial output for the third month in a row remained in the negative territory, contracting 1.5% in January
RBI may revise remuneration for banks.
RBI in wait and watch mode as several risks to inflation continue to exist including a sudden reversal of food prices and oil price volatility.
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