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MPC members showed urgency to contain inflation: Emkay Global

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The unanimous 50bps hike in the repo rate recently by the Monetary Policy Committee (MPC) and a sharp upward revision in the inflation forecast, depicted continued urgency on policy catch-up amid the MPC’s reassessment of the inflation outlook, said Emkay Global Financial Services in a report.

The minutes also indicated the rate trajectory ahead.

The RBI released the minutes of the MPC meeting held during June 6-8, 2022 on Wednesday.

According to Emkay Global, the broadening of inflation pressures and generalisation and persistence of inflation made most members uncomfortable, even though some reckoned the largely imported nature of the current inflation.

“Most members believed that, amid fears of second-round effects on estimates, an early hike was necessary to avoid any unintended economic shocks,” Emkay Global said.

The minutes also gave cues on the rate trajectory ahead. While all reckoned rates needed to go up further, there was still divergence on the possible terminal rate, the report said.

Prof Jayant Varma believed that the RBI MPC, like most leading central banks, should also provide a dot plot to signal its future rate projections, which will help in anchoring long-term bond markets and inflation expectations.

Dr Michael Debabrata Patra argued that the repo rate needs to be increased to at least as high as the one-year-ahead inflation forecast suggests (near zero), knowing that monetary policy works with lags.

According to Dr Ashima Goyal, the current stage of recovery, the one-year ahead real rate must not fall below -1 per cent, Emkay Global said.

Some members see a need for demand compression but recommend moving with caution

Emkay Global said there were signs of caution in terms of aggressive policy tightening. Dr. Patra suggested that current inflation is predominantly a supply-side issue, and as a consequence, for monetary policy, rather than materially compressing demand, managing expectations is the key.

Dr Goyal argued that, unlike the West, India’s inflation is yet neither demand-driven nor seeing a wage-price spiral. Labour markets are not tight and wage increases are not universal yet across rural and urban sectors.

Meanwhile, the credit offtake is still modest – broad money growth at 8.8 per cent was much lower than nominal income growth.

Dr Ranjan suggested continued monetary-fiscal coordination to anchor inflation expectations while RBI Governor Shaktikanta Das stated that the second-round effect of adverse supply shocks is what they are targeting.

According to Emkay Global, the triple whammy of commodity price shocks, supply-chain shocks and resilient growth has shifted the reaction function in favor of inflation containment.

The inflation prints of the next two quarters are likely to exceed seven per cent, which could pressure the RBI into acting sooner rather than later.

FY23 could, thus, see rates go up further by 75bps plus, with the RBI now showing its intent to keep real rates neutral or higher to quickly reach pre-Covid levels, it said.

As per Emkay Global, a maximum tightening of the policy rate by six per cent by FY23, of which liquidity tightening to two per cent of net demand and time liabilities (NDTL) is tantamount to another estimated 25bps effective rate hike.

However, the front-loaded rate hike cycle does not imply a lengthy tightening cycle, and once they reach the supposed neutral pre-Covid monetary conditions, the bar for further tightening may go higher incrementally amid increasing growth inflation trade-offs, Emkay Global said.

Business

Tata Motors Unveils Limited-Edition Safari STEALTH to Mark 27 Years of Legacy

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Tata Motors is celebrating 27 years of the Safari with the launch of the exclusive STEALTH Edition, a limited-run variant designed for those who seek style and performance. Available in both the Harrier and Safari models, only 2,700 units of this edition will be produced. The Harrier STEALTH is priced at Rs 25.09 lakh (ex-showroom, Delhi), while the Safari STEALTH starts at Rs 25.74 lakh (ex-showroom, Delhi) and is offered in both 6- and 7-seater configurations. With a striking design, premium features, and advanced technology, the STEALTH Edition adds a new level of exclusivity to Tata’s SUV lineup.

The Tata STEALTH Edition brings a bold, monotone design that reflects the growing demand for exclusive and distinctive vehicles. With limited units available, this special edition is set to attract enthusiasts looking for a unique SUV. Bookings for the STEALTH Edition opened on February 21, both online and at Tata dealerships across India, giving customers the chance to own a rare and stylish addition to Tata’s lineup.

The Harrier and Safari STEALTH Edition stand out with their bold design and advanced features, built on the sturdy OMEGARC platform derived from Land Rover’s D8 architecture. The exclusive Matte Black finish, R19 Black Alloy Wheels, and a distinctive STEALTH mascot give these SUVs a powerful road presence. Inside, the cabin is designed for comfort with ventilated first- and second-row seats (Safari only for the second row), a Carbon-Noir interior theme, and a voice-assisted dual-zone climate control system.

Technology is a highlight, featuring a 31.24 cm Harman touchscreen, Arcade App Store, Alexa Home 2 Car, Map My India navigation, and a 10-speaker JBL audio system with Harman AudioworX. Power comes from a 2.0L KRYOTEC BS6 Phase 2 turbocharged engine producing 170PS, paired with a 6-speed automatic transmission. Safety is a priority, with Level 2+ ADAS offering 21 functions, including a segment-first Intelligent Speed Assist, along with 7 airbags and ESP with 17 safety features.

Unveiling this exciting new version of the Harrier and Safari, Vivek Srivatsa, Chief Commercial Officer, Tata Passenger Electric Mobility Ltd., stated, “Tata Motors has been a leader in the Indian SUV segment, with innovation at its core. The Tata Safari, which introduced the concept of a lifestyle SUV to India, reflects this legacy of pioneering excellence. Over 27 remarkable years, the Safari has constantly evolved, and the launch of the STEALTH Edition is a tribute to this journey. This special edition is an exclusive offering, with only 2,700 units available in the striking STEALTH Matte Black finish. More than just an SUV, the STEALTH Edition is a symbol of prestige, adventure, and capability, making it a highly desirable collector’s item for enthusiasts and connoisseurs. Owning a STEALTH Edition isn’t just about having an extraordinary vehicle—it’s about claiming a piece of automotive history that many will aspire to have in their collection.”

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Business

Maruti Suzuki’s New Mid-Term Plan Aims To Make India An Export Hub, Launch More EVs

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New Delhi: The Suzuki Motor Corporation of Japan, the parent company of Maruti Suzuki India, on Thursday announced a new mid-term plan with a “rethink” in its strategy as “the business environment has changed due to declining market share in India” and the growing electrical vehicles segment.

In its new mid-term plan for 2025-30, the company has identified India as its “most important market”. Maruti Suzuki aims to create a manufacturing capacity of producing 4 million cars annually to reclaim a 50 per cent market share in India and use the country as a global export hub as well.

The auto major plans to expand its EV lineup starting with the e-Vitara, and is aiming to launch four new EV models by FY30 in a segment where its rivals like Tata Motors and Mahindra & Mahindra already have a varied EV portfolio in India.

“In India, we will promote further localisation in line with the growth of the electric vehicle market,” the company said.

Maruti Suzuki is currently exporting three lakh vehicles from India annually. By the end of this decade, it is targeting the export of 7.5-8 lakh units per year.

While the company noted it achieved revenue and profit targets ahead of schedule by improving sales mix and quality, its sales volume target could not be met.

It noted that the “competitive environment is becoming increasingly severe, and the quality of product functions, equipment and services required by customers is increasing”.

It aims to be India’s no.1 carmaker in terms of production, local sales and exports of electric cars. A total of six electric vehicles will be introduced by FY30, including four electric cars and two commercial vehicles.

Suzuki Motor plans to invest 1,200 billion yen (about Rs 7,000 crore) as capital expenditure towards production, new models, carbon neutrality and quality measures. A new plant in Haryana’s Kharkhoda and an assembly line in Suzuki Motor Gujarat will come onstream by 2030 for a total installed capacity of four million units.

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Business

‘Made in India’ iPhone 6e not SE variant but a next-gen entry point for consumers

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New Delhi, Feb 20: In a further push to the local manufacturing, the entire iPhone 16 lineup, including the newly-launched iPhone 16e, is now being assembled in India for domestic market as well as for exports, as industry experts on Thursday cleared the air around the new device being compared to now-retired iPhone SE.

The new Apple device, with A18 chip, breakthrough battery life, Apple Intelligence, and a 48MP 2-in-1 camera system, is being manufactured/assembled for local consumption as well as for export to select countries.

According to experts, iPhone 16e is not iPhone SE4 and the whole “comparison is futile”.

When iPhone SE was launched, it was another masterstroke at that time. However, times have changed since then.

“Essentially, Apple retired the SE lineup and extended the iPhone 16 lineup with a new entry point. iPhone SE was no longer adding any value to consumers, developers or Apple,” said Neil Shah, Partner and Co-Founder at Counterpoint Research.

The iPhone SE which was positioned as a “Special Edition,” which brought nostalgia of older and smaller design, was priced around $400.

However, the iPhone SE lost its value and popularity, which used to be once 16 per cent of the total iPhone sales volumes, dropped to 1 per cent last year.

According to Shah, consumers now prefer better cameras, bigger displays and faster processors.

“With all this background, what Apple did was to extend the 16 series with a newer ‘base version’ of iPhone 16 and now retired SE,” Shah explained.

According to industry experts, the company has done well with streamlining the series, reducing fragmentation in design and experience and able to charge $599 (US)/Rs 59,999 (India) with the newest entry point for the best Apple experiences.

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