Summers dogged by controversies over past views
Despite its admirable competence and proven track record, the RBI doesn't have the capacity to supervise an economy that's growing so fast and becoming larger by the year, points out T C A Srinivasa Raghavan.
The US Federal Reserve has raised its benchmark interest rate by 0.25 per cent, only the second increase in a decade.
There will very little direct impact from the US Fed's rate hike this time, as we are well prepared both to handle liquidity, outflow of FII funds and managing our currency. But that doesn't mean India will be out of the woods anytime soon, says M V Subramanian.
'Returns can be very variable in equity markets.' 'That is why I tell small investors don't put 100 per cent of your money in equities, even if you are young.'
India is better prepared to deal with any further US Fed tapering, but the country needs to remain vigilant to face eventualities, Reserve Bank Governor Raghuram Rajan said.
Global funds, according to Christopher Wood, global head of equity strategy at Jefferies, are now beginning to pay more attention to India with the market now offering 30 companies with a market capitalisation over $25 billion.
She will replace Ben Bernanke as the Chair of the Federal Reserve.
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.
Markets end in red; bluechips struggle to keep pace.
Gold prices on Wednesday sky-rocketed by Rs 340 at Rs 11,510 per ten gram as investors directed their money to the precious metal after the dollar fell, sparked by Federal Reserve cutting key interest rates.
The cut is being seen as an emergency measure to boost the US economy.
Nifty PSU Bank index gained 1% led by Allahabad Bank, Andhra Bank, Syndicate Bank and IDBI Bank
The Federal Open Market Committee's statement after meeting in Washington said inflation has been "elevated" and remains a risk, using words identical to the last decision on June 29.\n\n
US gold futures slid over 1 per cent on Thursday, while silver futures dropped 2 per cent.
'While foreign institutional investor flows are still negative, they will turn positive in the latter part of 2023 as India's resilient growth becomes perceptible.'
Expect heightened volatility and stress to hit the markets. Caution may be the need of the hour, alerts Akash Prakash.
An escalation in the already simmering tensions between North and South Korea, China and Taiwan, and Russia and Ukraine could prove to be a bigger worry for the markets over the next few months rather than central bank policy action, said analysts. The markets, they said, are still not fully factoring in this possibility. "The conflict between Iran and Saudi Arabia is another geopolitical worry.
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 gold and crude oil prices, which have risen to records this year, may ease a little if the US central bank Federal Reserve cut rates at its meeting on Tuesday, an analyst said.The Fed is scheduled to meet today to consider revision of interest rates. The US banking sector regulator has already cut the rate at which it lends to banks by 0.25 per cent to 3.25 per cent at an emergency weekend meeting on Monday.
From the Sensex pack, JSW Steel, Tata Steel, NTPC and UltraTech Cement emerged as major winners, closing the day with a gain of up to 3.33 per cent. On the other hand, Asian Paints, ITC, L&T and SBI were the laggards, ending the session up to 3.95 per cent lower. Of the 30 Sensex stocks, 14 closed the day in green, while on the 50-stock index Nifty 25 scrips ended with gains.
The rupee rose by 12 paise to close at 79.78 against the US dollar on Monday due to a weak dollar in overseas markets and an improved appetite for riskier assets. Stronger regional currencies also supported the rupee sentiment ahead of the US Fed policy decision on Wednesday. Weak domestic equities and FII outflows, however, capped sharp gains. At the inter-bank forex market, the local unit opened at 79.86 against the greenback and moved in a range of 79.70 to 79.87 in the day trade.
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.'
Only the top 5 per cent profit makers account for 75 per cent of profits.
Bond markets, global as well as domestic, are likely headed towards hard times over the next three to six months, as higher vegetable prices, rising fuel costs, and improved wages may keep inflation hot, believe analysts, who expect the yields to hit 7.5 per cent in the near-term from the current 7.234 per cent. In this backdrop, they suggest investors can put in money in funds/instruments with residual maturity of 4 to 6 years, while longer-term investors can allocate cautiously to the longer end in the range beyond 7 years.
'India seems to be on a relatively better wicket compared to other emerging markets.'
M&M was the biggest loser in the Sensex chart, falling 6.39 per cent, followed by Tech Mahindra, Nestle India, Bajaj Finance, Axis Bank, ITC, JSW Steel, HDFC Bank and RIL. On the other hand, Sun Pharma, Tata Motors, Bharti Airtel, L&T and Infosys were among the winners, rising up to 2.10 per cent.
It is by now quite clear that in all likelihood the US Federal Reserve will hike interest rates in its next meeting in mid-December.
The Indian rupee may remain under depreciation pressure on account of plateauing of exports and subsequent widening of the current account deficit, said the Economic Survey 2022-23 tabled in Parliament on Tuesday. It said the "risks to the current account balance stem from multiple sources". The country's current account deficit (CAD) widened to 4.4 per cent of the GDP in the quarter ended September from 2.2 per cent in April-June due to higher trade gap, as per latest data of the Reserve Bank of India.
The partially convertible rupee closed at 61.45/46 per dollar, weaker from Wednesday's 61.35/36.
The US Federal Reserve's interest rate decision, quarterly earnings of corporates and domestic macroeconomic data will influence trading in the equity market in a holiday-shortened week ahead, analysts said. Foreign funds' trading activity, monthly automobile sales data and global trends would also guide market movement this week, they added. Markets would remain closed on Monday on account of 'Maharashtra Day'.
It could be a tough week In the run-up to such an event, the market is always nervous.
The broader NSE Nifty shuttled between 10,784.65 and 10,689.80, before ending 21.30 points, or 0.20 per cent, lower at 10,718.05.
It has mostly been a one-way street for markets that have moved up sharply since July. The front-line indices - the S&P BSE Sensex and the Nifty50 - have gained 6.7 per cent and 7.3 per cent, respectively, in the past three months. The rally in mid- and small-caps has been sharper, with both indices surging 14 per cent and 9 per cent, respectively, during this period. This sharp run has made analysts at Jefferies cautious.
Days after the US Fed raised the interest rate, the RBI may go in for its third consecutive policy rate hike by at least 35 basis points to check high retail inflation, experts said. The central bank has already announced to gradually withdraw its accommodative monetary policy stance. The Reserve Bank of India's rate-setting panel -- the Monetary Policy Committee -- will meet for three days from August 3 to deliberate on the prevailing economic situation and announce its bi-monthly review on Friday.
Pharma shares extended losses after the government's ban on combination drugs.
Markets ended higher, amid firm global cues, and are on track for third straight day of gains.
'Yet the market didn't do all that badly because it was cushioned by domestic inflows.'
Broader markets underperformed indices with BSE Midcap down 0.43% while the Smallcap index fell 0.07%.
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