Business
RBI may raise policy rates by 75 bps cumulatively in next 2 reviews: SBI Research
SBI Research expects the central bank, Reserve Bank of India (RBI), to raise key policy rates both in its June and August policy meeting by a cumulative 75 basis points.
Beyond August, rate actions might be more balanced and judicious and the terminal repo rate is expected to be at 5.15-5.25 per cent by FY23, it said.
This is tantamount to saying that the RBI should not increase the repo rate by more than 1.25 per cent for an incremental negative contribution to kick in.
Retail inflation surged to 7.79 per cent on yearly basis in April 2022, as compared to 6.95 per cent in March 2022, mainly on account of food price inflation.
Inflation prints are now likely to stay higher than 7 per cent till September, the SBI Research said in a report.
“Beyond September, inflation prints could hover between 6.5-7.0 per cent. Our FY23 inflation forecast is at 6.5 per cent, taking into account the possibility of an extended food price shock,” it said.
The Russia-Ukraine conflict has significantly impacted the trajectory of inflation.
The latest April inflation print shows wheat, protein items (chicken in particular), milk, lemon, cooked meal, chillies, refined oil, potato, chillies, kerosene, firewood, gold and LPG are contributing to overall inflation in a substantive manner.
Interestingly, inflation in protein items like chicken, mustard oil etc, softened in April.
However this might be an aberration, given that April was the month of Navratri and other religious festivals, it added.
Surprisingly, the contribution of petrol and diesel in overall inflation has been declining steadily since October 2021, while there is a steady increase in the weighted contribution of kerosene and firewood in headline inflation.
The significant increase in weighted contribution of kerosene perhaps reflects the impact of high fuel costs in rural areas. This does not augur well for rural demand.
“The weighted contribution of LPG has also increased, reversing a downward trend. This however, may be attributed to commercial usage of LPG.”
Besides, the report said the RBI may increase the CRR rate by another 100 bps, after raising it by 50 basis points recently.
The RBI can give back to the market at least 3/4th of the Rs 2.6 lakh crore absorbed through the CRR hike, or Rs 1.95 lakh crore, in some form to address duration supply.
It would lower the market borrowing to around Rs 12.36 lakh crore for FY23 compared to the Budget estimate of Rs 14.3 lakh crore, the report added.
Further, SBI research added that the fall of the rupee to new lows, with spiking volatility breaching the psychological levels of 77 augurs the uneasy situation, reflective of the turbulence in broader markets globally, and the limited choices before the central bank in managing the exchange rate, even with seemingly comfortable levels of forex reserves close to $600 billion.
“We don’t expect the rupee to breach the levels of 80 and instead show an appreciative bias over time,” it said.
Business
Nifty, Sensex see firm recovery after RBI’s support to rupee

Indian equity benchmarks posted a firm recovery, sustaining gains for the second week as investors looked past early inflation worries, especially after the central bank’s special dollar window for oil marketing companies helped the rupee rebound.
Nifty added 2.78 per cent during the week and gained 0.65 per cent on the last trading day to reach 23,146.
At close, Sensex was up 413 points or 0.56 per cent at 74,729. It gained 3.11 per cent during the week.
Market sentiment was dented earlier in the week by consumer inflation hovering near the upper end of the Reserve Bank of India’s tolerance band and a hotter‑than‑expected wholesale price index print that pushed benchmark bond yields to multi‑year highs.
The central bank raised the daily cash reserve ratio maintenance requirement to absorb surplus liquidity, adding to caution. Market confidence, however, improved after the central bank’s special dollar window for oil marketing companies and tighter hedging norms drove a rupee-rebound, analysts said.
“Expectations of a review of LTCG tax and STT, softer crude prices and easing bond yields further revived risk appetite, prompting investors to tilt towards counters with strong Q2FY27 business updates, though the rally remained concentrated in large-caps, with mid-caps posting modest gains and small-caps ending marginally lower,” they added.
“Participants should remain selective, maintain disciplined position sizing and favour a hedged approach amid elevated macroeconomic and earnings-related uncertainty,” the experts said.
Information technology (IT) sector emerged as the standout performer on robust earnings and upbeat management commentary, while healthcare and pharmaceuticals lagged as investors favoured sectors with stronger near-term earnings visibility.
Meanwhile, fast‑moving consumer goods stocks came under pressure amid concerns over margin compression from elevated input costs.
Broad market indices performed largely in line with the benchmark indices as Nifty Midcap100 added 0.58 per cent and Nifty Smallcap100 dipped 0.12 per cent during the week.
In addition, foreign institutional investors (FIIs) turned net buyers of Rs 11.66 billion in Indian equities on Friday after overall selling eased sharply this week as market sentiment improved.
FIIs remained net sellers for the ninth straight week but their weekly selling moderated to Rs 89.91 billion from Rs 302.94 billion the previous week. On the other hand, domestic institutional investors (DIIs) stayed net buyers for a ninth consecutive week at Rs 78.13 billion, though they were net sellers of Rs 36.61 billion on Friday.
The sustainability of the recovery will hinge on earnings growth broadening beyond IT with revenue and margin delivery across financials, consumption and industrials under close scrutiny, analysts said.
Investors are keen on India’s October PMI that will offer insight into domestic demand momentum, while US jobless claims and Japan’s inflation print will shape global rate expectations.
Business
Japanese delegation visits MLFF tolling system near Delhi

A Japanese delegation visited the Multi-Lane Free Flow (MLFF) tolling system in Mundka-Bakkarwala on Friday on the sidelines of the 12th India–Japan Joint Working Group Meeting on Roads and Road Transportation.
The MLFF system provided insights into India’s technology-driven initiatives for seamless and efficient highway travel.
At the MLFFs, the National Highways Authority of India (NHAI) uses a combination of RFID-based FASTag electronic toll collection, automatic number plate recognition (ANPR) and AI analytics to allow vehicles to pass through charging points without stopping, slowing down or remaining in a designated lane.
MLFFs have already been installed at Choryasi in Gujarat, Mundka in Delhi, Gharaunda in Haryana and Daulatpura and Manoharpura in Rajasthan.
While 12 further locations have been awarded for conversion, tenders have also been launched covering an additional 104 toll plazas around the country.
The MLFF at Choryasi on the Surat–Bharuch section of NH-48 was the first to become operational.
The one at Mundka on Delhi’s Urban Extension Road-II was the second.
The expansion plan represents a significant shift from India’s traditional barrier-based toll plazas.
Rather than moving immediately to satellite-based toll collection, the Indian government has opted to build on the country’s established FASTag system and combine it with ANPR and AI.
Expert committees had recommended further consideration of GPS-based barrier-free tolling because of security, privacy and operational control issues, the Ministry of Road Transport and Highways has indicated.
FASTag and ANPR/AI was thus selected as the technology for the current MLFF programme.
The session of the India–Japan Joint Working Group on Roads and Road Transportation Sector was successfully held at Bharat Mandapam in New Delhi.
Discussions focused on advanced construction technologies, bridge and tunnel engineering, sustainable infrastructure and digital innovations, fostering the exchange of technical expertise and best practices.
“The meeting reaffirmed both nations’ commitment to safe, sustainable and technology-driven road infrastructure, aligned with the vision of Viksit Bharat @ 2047,” the Ministry said in a statement.
Business
India-US trade deal 98-99 percent done: US official

Washington, Oct 16: A long-awaited trade agreement between India and the United States is almost complete, with only one or two per cent of negotiations remaining, a senior US official said, signalling that the two countries are approaching a breakthrough after months of high-level discussions.
The official said the biggest issues had already been resolved and that negotiations were continuing at the highest political levels, including between President Donald Trump and Prime Minister Narendra Modi.
“The biggest items have been settled. I mean …., it’s pretty much done. We have that one, one or two per cent left,” the official told reporters during a State Department briefing on Friday.
The remarks came ahead of Secretary of State Marco Rubio’s scheduled visit to India, where he will hold discussions with Indian government officials and leading business executives in Mumbai and Jamnagar.
The official said the two governments remained in constant contact over the proposed agreement.
“We are actively engaged every single week,” the official said, adding that high-level discussions on the trade deal were taking place regularly.
The official cited recent diplomatic engagements involving US Trade Representative Jamieson Greer, India’s Commerce Minister Piyush Goyal and conversations between Trump and PM Modi as evidence of the momentum behind the negotiations.
However, the official also identified a significant complication that had delayed the agreement.
An earlier understanding had been linked to the International Emergency Economic Powers Act, or IEEPA, but the legal framework had to be reconsidered after the law was struck down, according to the official.
The development forced negotiators to revisit elements of the proposed agreement and contributed to several additional months of discussions.
Despite those complications, the official expressed optimism that the remaining differences could be resolved soon.
Rubio is scheduled to travel first to Uzbekistan for meetings with Central Asian leaders before proceeding to India.
In Mumbai, he will meet Indian government counterparts and senior executives from some of the country’s largest companies.
The official said the decision to visit Mumbai rather than New Delhi reflected the administration’s growing emphasis on commercial diplomacy and Indian investment in the United States.
Rubio will also travel to Jamnagar.
The official said Washington was seeking closer engagement with India across information technology, pharmaceuticals, defence cooperation and other sectors.
Further visits by senior American Cabinet officials are also anticipated next year as both governments seek to expand bilateral engagement.
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