Despite gross domestic product (GDP) growth being lower-than-expected for the July-September quarter, the six-member Monetary Policy Committee (MPC) may not cut the policy repo rate in the review meeting scheduled for next week due to high inflation in October, according to experts. "Consumer Price Index (CPI) inflation breaching the upper limit of the RBI's tolerance band in October (6.2 per cent year-on-year) is not a favourable backdrop for the MPC to commence the easing cycle, even as the growth outcome disappointed the MPC's expectations," said Shreya Sodhani, regional economist at Barclays, who expects the policy repo rate to be kept unchanged in the December meeting.
The expectations of a borrowing cut by the government faded among bond-market participants after the general election results because they feel the compulsions of running a coalition may put pressure on the exchequer, according to dealers. The recent trend of moderate depreciation in the rupee's nominal effective exchange rate (NEER) might not persist if there are significant changes to the structural reform agenda.
Debt mutual fund (MF) schemes, which witnessed relatively muted inflows in the past three years, saw a surge in investor interest in April amid election-induced volatility in the equity markets. Active debt funds garnered nearly Rs 66,000 crore net inflows in April, most at least since December 2020.
Short-term government bonds fell behind longer-dated securities in demand this month so far due to a liquidity crunch in the banking system and expectations of a delay in a rate cut, said market participants. Investors have favoured longer-tenure government bonds, or g-secs, with insurance companies and pension funds leading the charge by stocking up on those with maturities of 30 years and more. Preference for longer-term securities was strengthened by the conclusion of the borrowing programme, which compelled institutional investors to fulfil their requirements in the secondary market.
After an extremely stable 2023, the Indian rupee started 2024 on a promising note and has turned out to be the best-performing Asian currency so far in January, appreciating 0.1 per cent despite 2 per cent rise in the dollar index. All other Asian currencies depreciated by around 1.4-4 per cent during the month. The local currency regained its ground against the greenback on the back of foreign portfolio inflows, said market participants.
The liquidity in the banking system could ease in the coming week due to an increase in government spending - a development that would be the key for the Reserve Bank of India (RBI) to decide whether to extend the incremental cash reserve ratio (I-CRR) mandate for banks. There are signs of improvement in the liquidity scenario as banks parked Rs 25, 833 crore with the RBI on Thursday. Market participants expect liquidity to gradually improve by the end of the month or during the first week of September, aided by government spending.
'Data-dependence means you can raise or drop rates. The present stance is only for raising rates.'
'The cost of financing the fiscal deficit will decrease, as new passive investors join in.'
Surging forex reserves, now over $108 billion, have put 'considerable' pressure on the Reserve Bank of India, which finds the existing money control instruments inadequate to manage the capital inflows, according to PNB Gilts.
With only two months left for the completion of fiscal 2003-04, Centre's gross borrowings rose by about nine per cent to Rs 1,45,974 crore
A whopping 42 per cent increase in redemptions of government securities and 364 day treasury bills led to an over 14 per cent decline in the net borrowings of the Centre till December 26, according to PNB Gilts.
The government's market borrowing crossed Rs 100,000 crore (Rs 1,000 billion) till November 1, as fiscal deficit surged to over Rs 81,014 crore (Rs 810.14 billion) in first half of 2003-04, PNB Gilts said in its latest report.
The central government's net borrowings till July 25 stood at Rs 52,715 crore (Rs 527.15 billion), nearly 50 per cent of the budget estimate of Rs 1,07,194 crore (Rs 1071.94 billion) for 2003-04, according to PNB Gilts.
Exactly a fortnight ahead of the Reserve Bank of India's (RBI's) next monetary policy review, a key market indicator of interest rates - the overnight indexed swap (OIS) - suggests that the central bank may tighten policy by 35 basis points and then refrain from further rate hikes. RBI Deputy Governor Michael Patra recently described the OIS as the primary instrument for hedging interest rate risk in India. The six-member Monetary Policy Committee (MPC) of the RBI will meet on December 5-7.
The recent run on the US-based Silicon Valley Bank (SVB) and the subsequent seizure of its assets by the regulators may have sparked a global wave of risk aversion, particularly for start-ups. However, the Indian banking sector is unlikely to be a victim of any contagion effects, said analysts. he bank, which played a big role in financing start-ups and technology players, faced stress after incurring huge losses on its holdings of US bonds, following the most-aggressive monetary tightening cycle by the Federal Reserve in around four decades.
With RBI's repo rate cut and strong macroeconomic fundamentals like benign inflation, strong forex reserves and stable rupee, GDP growth is expected to be higher and interest rates are poised to touch new lows, PNB Gilts has said.
Amid liquidity and inflation concerns, government's market borowings have come down by 21 per cent to Rs 85,000 crore (Rs 850 billion) till November 25 this fiscal.
US-Iraq war fears may affect the sentiments in gilts market despite India's strong fundamentals and smooth sailing of the government's market borrowing now at Rs 1,34,036 crore (Rs 1,340.36 billion), PNB Gilts warned
Implying that the Centre's finances were comfortable and fiscal situation was set to improve, the government's gross borrowings fell by over 4 per cent to Rs 93,030 crore till September 20, PNB Gilts said on Tuesday.
The government is expected to raise Rs 5,000 crore (Rs 50 billion) in the first week of February even as market borrowing declined 27 per cent to Rs 96,000 crore (Rs 960 billion) till January 20, 2005.
The Centre's gross borrowing crossed Rs 1,62,000 crore (Rs 1,620 billion) as bond market turned bullish after a fall in price level in the country last week.
Soaring redemptions of government securities and 364-day treasury bills resulted in a 2.33 per cent fall in net borrowings of the Centre at Rs 91,821 crore (Rs 918.21 billion) till January 9, according to PNB Gilts.
Banks and bond dealers expect RBI to slash its bank rate by 0.50 per cent and reduce repo rate by 0.25-0.50 per cent in the forthcoming busy season credit policy, going by the excess liquidity and lower yield on government papers.
The Centre's net borrowings stood at Rs 61,318 crore (Rs 613.18 billion) till August 8, completing 57.2 per cent of the budgeted Rs 1,07,194 crore (Rs 1,071.94 billion) for this financial year, PNB Gilts said in New Delhi on Tuesday.
The government's gross borrowings were down by near nine per cent to Rs 51,001 crore (Rs 510.01 billion) till June 27 as against the same period last year, even as there was a 10 per cent rise in redemptions, PNB Gilts said.
Centre's gross borrowings stood at Rs 50,001 crore (Rs 500.01 billion) till June 13, down by over nine per cent from Rs 55,001 crore (Rs 550.01 billion) in the previous year, indicating fiscal prudence, PNB Gilts said.
The government has mopped up Rs 1,26,034 crore (Rs billion) till last week taking the gross market borrowing to over 88 per cent of the budgeted Rs 1,42,867 crore (Rs 1,428.67 billion) for the entire fiscal.
Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
The positive bias was aided by metal, realty and auto indices
Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
Punjab National Bank has made a name for itself in recovery of bad loan dues. Usha Ananthasubramanian, managing director and chief executive officer of the government-owned lender, explains how it has achieved this reputation.
The event will also hurt PNB's asset quality in the March 2018 quarter. While the finer details of the fraud have not been provided, making it difficult to gauge the exact impact, analysts say it will dent the bank's financials.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances