The rupee appreciated 7 paise to 79.74 against the US dollar in early trade on Thursday as a positive trend in domestic equities supported the local unit. However, a strong American currency overseas and forex outflows restricted the rupee's gain, dealers said. At the interbank foreign exchange, the rupee opened at 79.72 against the American dollar, then went lower to trade at 79.74 against the greenback in early deals, registering a gain of 7 paise over the last close.
RBI recently cut repo by 0.25 percentage point, taking the rate to 7.25 per cent in three reductions since January.
In its monetary and macroeconomic development report, RBI has raised hopes of a rate cut but also flagged some challenges.
The HSBC/Markit Purchasing Managers Index for the services industry inched up to 47.2 in November from 47.1 in October, the fifth sub-50.0 reading and indicated an output contraction across the Indian service economy.
The government has no plans to import wheat as it has sufficient stocks to meet the country's requirements, official sources said. The Food Corporation of India (FCI) has enough stock for public distribution, they added. "There are no plans to import wheat into India. "The country has sufficient stocks to meet our domestic requirements," a source said.
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The plan being negotiated by US Senate leaders would end a partial government shutdown and raise the debt ceiling by enough to cover the nation's borrowing needs at least through mid-February 2014, a source familiar with the negotiations told Reuters.
So, while it is great that India's numbers look relatively good, don't raise a cheer just yet, points out T N Ninan.
The Centre on Friday said it will sell 'Bharat Rice' in the retail market at Rs 29 per kg from next week to give relief to the common man and has also directed traders to disclose rice/paddy stock, as part of its efforts to control prices that have risen by around 15 per cent in the last one year. In a press conference, Union Food Secretary Sanjeev Chopra exuded confidence that these two measures along with the various restrictions of exports will help in cooling down the prices. Seeking to dispel market rumours, he categorically said the government has no plans to lift restrictions on rice exports any time soon.
Nirmala Sitharaman is proving to be a better finance minister than her initial rookie status might have led people to expect, observes T N Ninan.
Top gainers from the Sensex pack are Infosys, Cipla, NTPC, ITC and Lupin
Raghuram Rajan remains focused on a long-term inflation target of 4 percent.
Wholesale Price Index-based inflation declined to 6.62 per cent in January, however, retail inflation remained in double digits at 10.79 per cent during the month.
The wholesale price index-based inflation, which neared double-digit level in February, has probably peaked and was likely to decline as the country expected a good winter crop and drop in oil prices, RBI Deputy Governor K C Chakrabarty told reporters on the sidelines of a function in Bangalore on Monday.
RBI faces contradictory signals.
The HSBC India Manufacturing Purchasing Managers' Index for the manufacturing industry climbed from 49.6 in October to 51.3 in November on the back of a rebound in new orders and output.
'Rhetoric and chest-thumping are running high on India's recent growth record.'
'But will the giant waves developing elsewhere allow us to sail smoothly into fair winds?' asks Debashis Basu.
The wholesale price index inflation is projected at 6.4 per cent for 2017-18.
An appropriate policy response always warrants a correct diagnosis of the problem. That is why the recent trend in inflation and its causes, and the inflation outlook take on exceptional importance ahead of the RBI's policy review on January 25.
CARE Ratings, in a report, said it foresees an increase in the retail prices of petrol and diesel in the coming few days, depending on how the oil markets react in the reduction in supply from the cartel.
RBI may wait for a substantial downtrend and maintain repo at the current level in its third-quarter review.
Moody's Investors Service on Thursday slashed India's economic growth projection to 8.8 per cent for 2022 from 9.1 per cent earlier, citing high inflation. In its update to Global Macro Outlook 2022-23, Moody's said high-frequency data suggests that the growth momentum from December quarter 2021 carried through into the first four months this year. However, the rise in crude oil, food and fertilizer prices will weigh on household finances and spending in the months ahead.
Vegetables tend to get damaged faster during summers.
RBI expected wholesale prices-based inflation, which is near the double-digit region now, to moderate over the next few months but warned of upside risks owing to firming global commodity prices, particularly oil.
The overall market breadth remained firm as 1,618 stocks are advancing while 1,270 are declining.
Fitch Ratings said with GDP growth of 6.5% and WPI-based inflation of 8.8%, India may have entered into a stagflation period in 2011-12.
India's manufacturing sector activity contracted for the second consecutive month in September as both output and new orders witnessed a decline, an HSBC survey said.
PSU bank shares were the top gainers on hopes of a rate by the RBI on easing consumer inflation
RBI is closely monitoring monsoon.
The wholesale price-based inflation may have moderated somewhat in March but the pressure on prices is likely to continue for another two months, Finance Minister Pranab Mukherjee on Thursday said.
Here is some background on the candidates seen as potential successors to Rajan at the RBI
RBI Governor Raghuram Rajan on Tuesday kept the repo rate unchanged 6.50 per cent.
The Reserve Bank on Thursday said the country's wholesale price-based inflation and industrial production data should be improved and employment data availed for effective monetary policy management.
'India's economy is growing faster compared to the developed economies of the world.' 'More importantly, it is growing faster compared to most of the developing economies.' 'The monsoon is not the only thing that drives the rural economy and certainly not the national economy.' 'It is too simplistic to reduce everything to the monsoon.'
He said the short term macroeconomic priorities of the RBI continue to focus on bringing down inflation towards the government-set target of 4 per cent
Debt returns are always negative for investors in India, unless they are willing to take huge risk
In spite of Governor Raghuram Rajan's repeated concerns about inflation, many think there may still be a loosening of stance.
Retail inflation remained above the RBI's comfort level for the second consecutive month despite slipping slightly to 6.26 per cent in June while the factory output recorded a growth of 29.3 per cent in May, mainly on account of the base effect, the government data showed. The marginal slippage in the Consumer Price Index (CPI)-based inflation was noticed despite little firmness witnessed in the food inflation which inched up to 5.15 per cent in June from 5.01 per cent a month ago. Retail inflation based on Consumer Price Index (CPI) was 6.3 per cent in May 2021 and 6.23 per cent in June 2020.
Growth in China's consumer inflation slowed than market expectation to 1.6 per cent in September, the lowest since January 2010, according to the official data released on Wednesday.
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