Tactical investors should have an investment horizon of around six months to one year, long-term investors should stick around for 10 years or more.
RBI is committed to bringing down retail inflation to eight per cent by January 2015 and six per cent by January 2016.
While a pick-up in summer monsoon rains in recent weeks is expected to cool food inflation, most analysts don't anticipate another rate cut before a new governor is on the job
Information technology (IT) companies have been on the road to revival in the past one year. From being the worst-hit sector in 2022 with a loss of 26 per cent, the Nifty IT index closed 2023 with gains of 24 per cent. So far in 2024, the index is up around 7 per cent against the nearly flat Nifty 50 benchmark index. The IT index has been on a continuous decline in the last three sessions.
Inflation measured by the Wholesale Price Index had declined to 6.62 per cent in January. It was 7.18 per cent in December and 7.24 per cent in November.
Auto sector cheers RBI rate cut as 'festival gift'
'A possible post-election growth momentum may be lost.'
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.
Bankers are expecting a further fall in interest rates, due to ample liquidity in the banking system.
Foreign investors have pulled out a massive Rs 22,000 crore from Indian equities so far this month, due to uncertainty surrounding the outcome of the Lok Sabha elections and outperformance of Chinese markets.
Among the 30 Sensex companies, Axis Bank, ICICI Bank, HDFC Bank, Tech Mahindra, Larsen & Toubro, Bajaj Finserv, State Bank of India, Reliance Industries and Infosys were the biggest gainers. Power Grid, Asian Paints, Tata Steel, Nestle, Maruti and JSW Steel were among the laggards.
'Despite the current uncertainties, the long-term outlook remains constructive due to strong fundamentals, government initiatives, and a stable banking sector.'
Bajaj Finserv, Infosys, Mahindra & Mahindra, Tech Mahindra, Hindustan Unilever, State Bank of India and HCL Technologies were the biggest gainers. On the contrary, Asian Paints, JSW Steel, NTPC and Adani Ports were among the laggards.
The chief beneficiary of the cycle of interest rate cuts and liquidity injections will be emerging markets, specifically Asia.
FPIs, which are holding large exposures in Indian debt, could also be expected to book some capital gains as yields slide down
There are glaring anomalies with Indian data and that could lead to wrong policy prescriptions.
'There has been a change in the advances mix, with the share of corporate loans decreasing.'
Rate cuts are a natural consequence that the RBI has no hesitancy in delivering.
However, some analysts say RBI Governor Raghuram Rajan may delay the rate cuts amid mounting concerns over the government's fiscal health.
The RBI on Tuesday maintained status quo on interest rates, saying there have been no developments to warrant further easing since an unscheduled rate cut about a fortnight ago.
A rate cut will bring positive sentiment around the Budget.
Among the Sensex components, Mahindra & Mahindra, Bharti Airtel, Tech Mahindra, Titan, Infosys, JSW Steel, Bajaj Finserv, HDFC Bank, Larsen & Toubro and Kotak Mahindra Bank were the major gainers. Maruti, State Bank of India, Power Grid, Tata Motors and IndusInd Bank were the laggards.
Retail inflation increased to four-month high of 5.08 per cent in June as food items, including vegetables became dearer, according to government data released on Friday. The Consumer Price Index (CPI) based retail inflation was on a decline since January, before rising again in June. The CPI-based retail inflation was 4.8 per cent in May 2024 and 4.87 per cent in June 2023.
Analysts expect banks with a strong deposit franchise to benefit from SBI's rate cut as they too are likely to follow the leader.
Fridge, washing machine, and paint makers are expected to cut prices shortly, while TV, aircon, and sanitary napkin makers are a disappointed lot
Union Bank of India, United Bank of India reduced base rates.
The Reserve Bank of India cut its repo rate by 25 basis points to 6.50 per cent.
"The Monetary Policy Committee recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture," the RBI said in its fifth bi-monthly monetary policy for this fiscal.
After fighting inflation for more than two years, Reserve Bank of India (RBI) Governor Duvvuri Subbarao finally managed to bring it below the five per cent level - the tolerance level of the central bank - in FY14.
Issuers are currently not comfortable with the bids they have been getting for their bond offerings.
Governor Raghuram Rajan lowered the benchmark repurchase rate to 7.75 per cent from 8 per cent, the first reduction since May 2013.
The rise in bond yields would make it difficult for banks to pass on rate cuts as except for retail loans, most of their legacy portfolio are linked to marginal cost based lending rate, which takes into consideration bond yields.
Since the last nine years, gold investors have made money each year, while gains in silver have been consistent only in the last five years.
Top losers in the Sensex pack included IndusInd Bank, Yes Bank, SBI, L&T, Tata Steel, M&M, Bajaj Finance, Vedanta, Tata Motors and RIL, tumbling up to 6.97 per cent.
CEOs have complained that high interest rates have blocked their investment decisions. At the same time, customers are also deferring their purchases for new consumer durables, cars, and homes.
Jewellery stores remained deserted as buyers deferred their non-essential purchases awaiting softness in gold prices.
'While Indian markets are indeed not inexpensive, the valuations of largecap stocks are still a considerable distance from being overstretched.'
The Reserve Bank of India is widely expected to lower interest rates for a third time this year.
Shares of rate-sensitive realty, bank and auto sectors were on buyer's radar on Wednesday.
'More than investors, fund houses, and advisors have raised caution and limited flows on small-and mid-caps.'
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