The International Monetary Fund (IMF) on Tuesday slashed India's growth forecast for 2022-23 (FY23) by 80 basis points to 7.4 per cent, citing less favourable external conditions and rapid policy tightening by the central bank. In its update to the April World Economic Outlook, the IMF said that though a global recession in 2022 was ruled out with a growth estimate of 3.2 per cent, the balance of risks was squarely to the downside, driven by a wide range of factors that could adversely affect the global economic performance. "The risk of recession is particularly prominent in 2023, when in several economies growth is expected to bottom out, household savings accumulated during the pandemic will have declined, and even small shocks could cause economies to stall.
State Bank of India hikes lending rates, and other banks pick up the signal.
The Insurance Regulatory & Development Authority has capped the charges from the fifth year to around four per cent of the annual premium paid.
As the second wave of the Covid-19 pandemic abates, India's automakers are hopeful of a quick recovery in sales volumes, led by better rural sentiment, low interest rates, improved availability of finance and a gradual uptick in business and economic activity. In fact, companies have started to ramp up production already, encouraged by high order books and the growing preference for private transport in both rural and urban areas as a means to avoid infections. In early April, the industry had been bullish as the sales trend for March showed that the effects of the Covid-19 pandemic had been left behind. The total vehicle sales had grown by 77 per cent, albeit on a lower base, and for the past few months, sales had consistently touched 300,000 units per month.
Interest rates on all loans linked to MCLR stand reduced by 5 bps with effect from May 10, 2019: SBI
Citing the impact of the second wave of the pandemic over the economy and consumer sentiment, Swiss brokerage Credit Suisse has lowered its nominal GDP growth forecast by 150-300 bps to 13-14 per cent, but expects a stronger recovery in the second half as it sees the lockdowns having limited impact on tax collections. Last month, Neelkanth Mishra, the co-head of equity strategy for Credit Suisse Asia Pacific, and India equity strategist, had told PTI that he expected the real GDP to fall to 8.5-9 per cent in FY22 due to the more severe pandemic attack. The virus case load has crossed the 25-million mark, death toll from the same is nearing 2.9 lakh mark, which is one of the highest in the world as the test positivity rate has been around 15 per cent for long.
The Reserve Bank of India on Friday hiked its key short-term lending and borrowing rates to banks by 25 basis points to combat rising inflation, a move that could signal hardening of commercial lending rates.
Given the relevance of bank deposits for Indian savers, whether the regulator would permit linking savings interest rate to a repo-like structure needs to be seen, as a move of this nature could increase volatility in savings also.
Automobile retail sales in India increased by 37 per cent in April on a low base of COVID-hit April last year, automobile dealers' body FADA said on Thursday. Total sales across categories rose to 16,27,975 units in April, as compared to 11,87,771 units in the year-ago period. On a year-on-year basis, all vehicle categories including passenger vehicles and two-wheelers were up as compared with April last year.
The reason why private banks will play the deposit pricing game strategically is the weakening of banks' deposits base given the competition from MFs and insurance companies due to tax-savings schemes.
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.
The Reserve Bank on Wednesday cut the repo and reverse repo rates by 50 basis points each with immediate effect.
The new rates will be effective from May 9.
The Reserve Bank may announce cut in policy rates up to 50 basis points soon as inflation has been on way downward for past three successive weeks, bankers said.
According to the research arm of the country's largest lender State Bank of India, with stability in the currency, the RBI Governor is likely to lower the marginal standing facility rate, at which the RBI lends to the banks, once the lenders exhaust their overnight repo borrowing limits.
Morgan Stanley on Thursday became the latest brokerage to question the valuations of Indian equities and downgraded them from 'overweight' (OW) to 'equalweight' (EW) and recommended taking some money off the table. "We move tactically EW on India equities after strong relative gains - we expect a structural multi-year earnings recovery, but at 24 times forward price-to-earnings (P/E) we look for some consolidation ahead of US Fed tapering, an RBI hike in February and higher energy costs," Morgan Stanley equity strategists, led by Daniel Blake and Jonathan Garner, said in a note on Asia Pacific markets. The brokerage has upgraded Indonesia to OW, while maintaining an EW stance on China and UW on Taiwan.
Punjab National Bank (PNB), the country's third largest lender, followed its peers to lower its benchmark rate, giving in to the government's wish that rates needed to fall to boost consumer lending.
The operating environment is unpredictable, but if the bank can't give a clear picture of what's in store, calling the bottoming out of its asset quality stress is nearly impossible.
Distribution yields could rise, but risk of Covid, higher interest rates remain.
In a bid to support revival of sectors hit most by the Covid-19 pandemic, Reserve Bank of India on Friday decided to open a separate liquidity window of Rs 15,000 crore for certain contact-intensive sectors like hotels and restaurants, tourism and aviation ancillary services.
Many analysts over the past week have said the RBI has legroom to cut rates to the tune of 65 bps by June and some like Barclays and BofA have also spoken about the likelihood of an inter-meeting cut.
Majority of the experts expect a 25 basis point reduction.
According to SBI Ecowrap, every $10/barrel increase in oil price results in additional import bill of $8 billion.
India is much better placed today to deal with future waves of the pandemic relative to the first wave, RBI deputy governor Michael Patra said.
The monetary authority said it was worried on three fronts with regard to inflation as well as the economy.
Wall Street brokerage Bank of America Securities has pencilled in lower than the consensus retail inflation for the current fiscal year at 5 per cent, but higher than the previous forecast of 4.7 per cent. Stating that the June print will be critical for the future trajectory -- after the extremely high 6.3 per cent print in May, the brokerage in a report on Friday revised upwards its forecast by 30 bps to an yearly average of 5 per cent for the year to March 2022. "Though the June print will be critical for future trajectory, beyond near-term, we find some comfort from our analysis of four key factors that are likely to influence CPI inflation the most.
The State Bank of India on Saturday hiked its benchmark prime lending rate by 0.50 per cent from 12.25 per cent to 12.75 per cent.
Housing Development Finance Corporation has increased loan rates by 75 basis points for new customers. It has hiked its prime lending rate (PLR) by 50 basis points to 14 per cent.
'As valuations of large-caps appeared to be out of whack, investors started lapping up quality mid-caps and small-caps, which were available at relatively comfortable valuations.'
Housing Development Finance Corporation, India's largest mortgage financier, today increased its retail prime lending rate by 50 basis points to 14.25 per cent. This is the first time HDFC is increasing its PLR in two years.
Indian companies are expected to dole out an average increment of 9.1 per cent in 2022, higher than the pre-COVID-19 increment in 2019, as companies are focusing on retention of talent through rewards. According to the 2022 Workforce and Increments Trends Survey by Deloitte Touche Tohmatsu India LLP, the average India 2022 increment is expected to go up to 9.1 per cent from eight per cent in 2021. Moreover, the 2022 projected increment is higher than the pre-COVID-19 increment in 2019 by 50 basis points (bps).
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RBI is scheduled to unveil its credit policy on June 3.
The Reserve Bank has kept the key policy rates unchanged, while the Cash reserve Ratio (CRR) has been cut by 25 bps to 4.25%.
The increase raises the bank's benchmark advance rate to 13.75 per cent from 13.25 per cent. The revised floating reference rate for consumer loans, including home loans, will be 10.75 per cent.
They own 27.5% in top 75 listed firms; investments bounce back after falling two straight quarters
The primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations.
The revision in rate is for deposits of up to five years and will be effective from Sept 07, 2012.
The FPI holding in India's top 100 companies, which are part of the Nifty 100 index, declined to 24.23 per cent on average at the end of March this year, from a high of 27.5 per cent at the end of March 2021. This is the lowest FPI holdings in India's top listed companies in at least three years. A general sell-off by FPIs has weighed on stock prices and the benchmark S&P BSE Sensex is down 8.5 per cent, from its 52-week high made in October 2021. Most analysts expect FPI flows to remain weak in FY23 as well, given rising bond yields in the US and an expected earnings slowdown in India due to high inflation and commodity prices.
'The rate cut could have been higher in the current economic conditions which would have had a stronger impact on business sentiment and spurred investment in a big way.'
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