RBI may hold rates steady as economic parametes are going strong, say experts.
Foreign portfolio investors (FPIs) have pulled out Rs 4,515 crore from the equities segment in the first half of July as they turn cautious towards the Indian market. "With markets trading near all-time high, FPIs would have chosen to book profits. "They have also been staying on the sidelines given high valuations and most likely on the back of the risk of a potential third wave of the coronavirus pandemic," said Morningstar India associate director (manager research) Himanshu Srivastava. Though the continuing firmness in the dollar and the possibility of rising bond yields in the US do not augur well for capital flows into emerging markets like India, there is no immediate worry at the moment, he said.
Senior officials say the government might come up with an incentive package for the SEZs following the release of Foreign Trade Policy.
Benchmark 10-year bond yields hit a 13-month peak as bond traders priced in more aggressive monetary easing next year.
The finance minister chided the central bank on Tuesday over its focus on fighting inflation, saying the Reserve Bank of India (RBI) also needed to abide by the government policy to promote economic growth.
The S&P BSE Sensex plunged 301 points to close at 25,490 and the Nifty50 fell 86 points to end at 7,815.
India has become the 37th country to join the list of Strategic Trade Authorization-1 category, the only South Asian nation.
With Donald Trump the appeal has to be to his business instincts in which his personal interests seem to play a significant role, says former foreign secretary Kanwal Sibal.
RBI will now increasingly shift focus to domestic parameters
Policymakers have been grappling with high prices for food staples such as onions and potatoes even after the central bank raised interest rates by a quarter percentage point in each of its previous two reviews.
A 6-7 million tonnes shortfall in rice production due to a fall in paddy sowing area is likely to keep rice prices at elevated levels, adding to the inflationary pressure that the slowing economy is already grappling with. Elevated food prices, including that of cereals, had led to retail inflation reversing a three-month declining trend, to touch 7 per cent in August. Similarly, the wholesale price inflation, which declined to 11-month low, also showed price pressures from cereals resulting from wheat output being impacted by severe heat waves in some parts of the country.
With Deputy Governor Viral Acharya and another member Chetan Ghate voting for a status quo, RBI governor Shaktikanta Das and three others outvoted them for reduction in repo rate to 6.25 per cent from the existing 6.50 per cent.
Assocham expressed concern over the precarious situation that the manufacturing sector is in, observing that if the trend does not reverse with monetary and fiscal measures it would be difficult for the industry to generate jobs.
Data late on Wednesday showed consumer price inflation eased more than-expected to a 25-month low of 8.10 per cent in February, while industrial output unexpectedly expanded, albeit only by 0.1 per cent.
External Affairs Minister S Jaishankar left London at the end of a four-day visit to the United Kingdom on Friday with a message of convergence as the two countries agreed on an ambitious '2030 Roadmap' towards a Free Trade Agreement (FTA).
Foreign portfolio investors (FPIs) remained net buyers to the tune of Rs 12,266 crore in the Indian market in the first five trading sessions of February, as positive sentiment post-Union Budget 2021 sparked a rally in investment.
The S&P BSE Sensex shed 286 points to close at 24,539 and the Nifty50 lost 100 points to end at 7,456.
Had India agreed to join the trade pact, Indian markets would have been flooded with cheap Chinese products.
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.
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India's share of 2015 emerging market allocations will be driven by FII perceptions on likely growth and reform.
In New York, the dollar edged down against the yen for the first time in three sessions as investors weighed economic data and remarks from outgoing Federal Reserve Chairman Ben Bernanke.
The time is ripe to extend the confrontation with the Chinese to the maritime domain, says former RA&W officer Krishan Varma.
The S&P BSE Sensex shed 119 points to close at 27,977 and the Nifty50 dropped 45 points to finish at 8,591.
According to technical analysts, the Nifty could trade in the range between 7,400 and 7,700.
S&P is the only of the three major credit agencies with a 'negative' outlook on India.
Market breadth turned negative with 1,779 declines over 884 advances on the BSE
Conversely a rate hike may have positive effects if it triggers currency appreciation.
Singh also said that Indian troops are standing firm braving extreme weather and hostile forces to defend the country's territorial integrity.
The S&P BSE Midcap and the S&P BSE Smallcap indices added 0.5% and 0.7%, respectively
Broader market outperformed the benchmark indices with S&P BSE Midcap gaining over 1%
Prime Minister Modi felt there were too many silos with no arrangement to take a comprehensive view on national security. The PM has entrusted NSA Ajit Doval to evolve a comprehensive roadmap and get it implemented, reveals Nitin Gokhale, Editor-in-Chief, Strategic News International.
Sensex, Nifty post biggest weekly fall this year on inflation data.
A fundraiser for the Aligarh Muslim University hosted in California saw keynote speakers talk about the plight of Indian Muslims and a way out.
The rupee has posted its biggest single-day fall in more than four months to end at 62.95 against the dollar.
Both Mahinda Rajapaksa and Modi have learnt from their past mistakes. Modi has understood that Rajapaksa is a 'forever politician' that India has to live with, observes Ambassador M K Bhadrakumar.
Interest rate sensitive stocks gain ground post decision
The country's exports jumped by 58.23 per cent to $34 billion in March as key sectors such as engineering, gems and jewellery and pharmaceuticals recorded healthy growth rate during the month, according to the Commerce Ministry's provisional data. Exports during April-March 2020-21, however, dipped by 7.4 per cent to $290.18 billion compared to $313.36 billion in 2019-20, the data showed. Imports during 2020-21 contracted by 18 per cent to $388.92 billion compared to $474.71 billion during 2019-20. In March 2020, the exports stood at $21.49 billion, which was a decline of about 34 per cent over March 2019 due to global slowdown induced by the Covid-19 crisis.
For July-September, it pegged CPI-based retail inflation at 4.2 per cent which it saw firming up to 4.8 per cent in the second half of the current fiscal.
At 12:25 PM, the barometer index, the S&P BSE Sensex was down 358 points or 1.3% at 26,368.
The repo rate or the short term lending rate was increased to 7.5 per cent from 7.25 per cent.
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