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RBI likely to increase repo rate by 50 basis points to 5.9% in Sep policy: Morgan Stanley

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The Monetary Policy Committee in the September credit policy is likely to increase the repo rate by 50 basis points to 5.90 per cent and will keep stance unchanged, according to a report by Morgan Stanley.

“We were earlier expecting a 35bp increase,however, sticky inflation and continued hawkish stance of DM central banks, warrants continued front loading of rate hikes, in our view,” the report said.

The inflation which is ranging above the upper tolerance band of the Reserve Bank of India (RBI) for the eighth straight and therefore Morgan Stanley too expect inflation to remain sticky around 7.1-7.4 per cent in September as well, driven by increases in food prices as per high frequency food price trend.

Thereafter, we expect the trend to moderate but remain above 6 per cent until January/Februaru 2023. Risks to the inflation outlook are skewed to the upside due to uncertainty around food inflation trajectory (sowing for rice, pulses is lower YoY), changes in global commodity prices and possibility of imported inflation if exchange rate weakens amid dollar strength, the report added.

Going forward, the key to track in the policy will be: (a) changes to growth or inflation forecast. While incoming inflation data is along expected lines,growth for QE Jun was a tad below our expectations (even RBI’s projections), (b) comments around comfort on external balance sheet in the context of external risks and (c) overall tone of the policy statement and path on real rate normalization.

The RBI has lifted the repo rate by 140 basis points and surplus liquidity has fallen significantly (now $19.1 billion from $89 billion in January 2022), pushing the weighted average call rate to 5 per cent from 3.5 per cent in April.

However, the normalization in real rates has been less stark, with real policy rates at -1.6 per cent currently vs. -3.8 per cent in April. The external environment remains challenging, with generally higher commodity prices vs. pre-pandemic, stronger dollar and continued hawkish response from DM central banks. While domestic macro fundamentals are strong, risks from continued elevated commodity prices need to be tracked.

Against this backdrop, we expect monetary policy normalization to continue, pegging the terminal repo rate at 6.5 per cent by February 2023. Risks seem skewed to the upside for the terminal repo rate driven by external factors, which could potentially keep inflation higher for longer.

Business

GT Mall Which Denied Entry To A Man Wearing Dhoti, Now Sealed For Defaulting On Rs 3.56 Crore Property Tax

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GT Mall Which Denied Entry To A Man Wearing Dhoti, Now Sealed For Defaulting On Rs 3.56 Crore Property Tax

The G.T. World Mall was closed on Thursday by the Bruhat Bengaluru Mahanagar Palike (BBMP) due to outstanding property tax payments totaling Rs 3.56 crore. The mall has been in the spotlight since a elderly farmer was denied entry for wearing a dhoti on Tuesday evening.

The mall received a notice from the civic organization Bruhat Bengaluru Mahanagara Palike (BBMP) directing them to settle the outstanding balance by July 31. Additionally, the city officials issued a warning, stating that if the payment is not received by the deadline, the mall will close even more.

Additionally, the mall’s trade license has been suspended.

A notice on the mall’s entrance stated, “Your trade license is suspended and your property is sealed for non-payment of arrears property tax, as per Section 156 of the BBMP Act 2020, read with a circular dated 06-12-2023.”

Nevertheless, the GT Mall management asserted that, in contrast to the Rs 3.56 crore indicated in the BBMP notice, two years’ worth of property tax, or Rs 1.78 crore, is due. The BBMP also asked mall management to explain why they wouldn’t let the elderly farmer in a dhoti enter the mall.

Dhoti incident at ‘GT Mall’

A video of an old man and his son pleading with GT Mall employees to let them into the shopping center surfaced on July 17. Even though they had reservations for a movie, they were reportedly refused entry because they were wearing dhotis.

Social media users have taken to criticizing and debating the viral video, with many demanding that the management of GT Mall be held accountable for their “disrespect” for the elderly man. On the matter, BJP opposition leaders criticized the Siddaramaiah administration.

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Business

Bank Of Maharashtra Q1 Earnings: Total Business Rises To ₹4,700,000,000,000

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The Bank of Maharashtra’s Q1 earnings were reported on the exchange on July 15.

The bank reported their revenue at Rs 6768.76 crore in Q1 FY25, a 24.9 per cent jump from same quarter previous year, which was reported at Rs 5,417.87 crore. The net profit stood at Rs 1,293.68 in Q1 FY25, which saw a 46.5 per cent jump quarter-on-quarter. The same quarter of the previous year saw a net profit of Rs 882,49 crore.

Between Q1FY24 and Q1FY25, the bank’s total business increased by 13.43 per cent YoY to Rs 4.76 trillion. However, compared to the same quarter previous year, the bank’s total deposits increased by 9.43 per cent YoY to Rs 2.67 trillion.

Gross and net NPA

Gross non-performing assets (NPAs) decreased marginally during the quarter, from 1.88 percent to 1.85 percent, demonstrating the resilience of asset quality (QoQ). At Rs 3,873 crore, gross non-performing assets (NPAs) were as of the last quarter, down from Rs 3,833 crore.

The bank’s meager 0.20 percent net non-performing assets (NPAs) did not alter. Net non-performing assets (NPAs) came in at Rs 415 crore, which is the same as the Rs 409 crore collected in the previous quarter.

Net NPAs for the bank held steady at a pitiful 0.20 percent. Net NPAs were reported at Rs 415 crore, which is the same as the Rs 409 crore figure from the previous quarter.

Net interest margin

The bank recorded net interest income (NII) of Rs 2,799 crore for Q1 FY25, up 20 per cent YoY from Rs 2,340 crore in the corresponding quarter of the previous year.

Share performance

The Bank of maharashtra’s share was trading around Rs 68.95 per share on Indian bourses, 5.95 per cent jump from the opening of The counter which opened at Rs 65.94 per share today.

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Gold Price Jumps ₹400 To ₹75,050 Per 10 Grams On Jewellers’ Buying

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Gold price on Wednesday jumped by Rs 400 to Rs 75,050 per 10 grams in the national capital on the back of fresh buying from jewellers, according to the All India Sarafa Association.

The precious metal had closed at Rs 74,650 per 10 grams in the previous session.

However, silver prices remained flat at Rs 94,400 per kg.

In sarafa markets, the yellow metal was trading at Rs 75,050 per 10 grams, up by Rs 400 against the previous close, the association said.

Traders said gold prices saw an uptrend due to rise in domestic demand.

In the international markets, spot gold was trading higher at USD 2,380.50 per ounce, up USD 12.60 per ounce.

“Gold prices traded positively. The buying was driven by expectations of weak inflation numbers to be release on Thursday evening in US, which could prompt rate cuts by US Federal Reserve in the September meeting,” Jateen Trivedi, VP Research Analyst, Commodity and Currency at LKP Securities, said.

Additionally, silver prices was also up at USD 31.25 per ounce globally.

“Spot gold closed with a gain of around 0.20 per cent at USD 2,363 per ounce on Tuesday, as the Fed Chair Powell, in his testimony to the US Senate Banking Committee, offered largely a balanced view on the US economy and the Fed’s monetary policy,” Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, said.

In his testimony, Fed Chair Powell said that the inflation trend is encouraging; however, the US central bank will need more data to gain confidence in cutting rates.

He (Powell) cautioned that lowering interest rates too little or too late could put the economy and the labour market at risk as inflation is not the only risk the US economy faces now.

“The US Consumer Price Index (June) data will be released on Thursday, which is crucial as traders look for possibility of rate cuts in September,” Singh added.

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