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RBI’s monetary policy meet: Here’s some of the expectations

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3 years ago

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Though the RBI’s raising policy rates in the ongoing monetary policy committee meeting is a “no-brainer”, as its Governor Shaktikanta Das said in a recent interview, investors, however, await the actual degree of percentage hike before taking fresh positions and future course of action in the financial markets.

Besides policy rates, investors also eye other macro-economic forward-looking guidance from the central bank.

The three-day meeting started on Monday.

In early May, the RBI, in a surprise off-cycle meeting, hiked the repo rate, the rate at which the central bank lends short-term funds to banks by 40 basis points (bps) to 4.40 per cent, amidst rising inflation concerns in the economy.

In the same off-cycle meeting, the cash reserve ratio was hiked by 50 basis points to 4.5 per cent essentially to squeeze out some liquidity from the system.

India’s retail inflation accelerated to 7.79 per cent in April, remaining above the tolerance limit of the central bank for a fourth month in a row. It is highly likely that the retail inflation will remain above 6 per cent for another few months.

Besides, wholesale inflation in the country rose to 15.08 per cent in April 2022 from 14.55 percent in March, which has been in double digit for over a year now.

Below are some of the expectations by analysts, market observers, and real estate players on the possible outcome of the ongoing monetary policy meeting:

Deepak Jasani, Head of Retail Research at HDFC Securities

MPC’s off-cycle policy meeting in May clearly pivoted its focus on inflation over growth as a policy priority. The MPC is likely to increase the benchmark repo rate in its ongoing monetary policy review as inflation shows no signs of abatement.

The RBI is likely to follow a nuanced and calibrated approach to rate hikes once it reaches its pre-Covid neutral accommodation (5.15 per cent vs current 4.40 per cent). We expect a 40 basis points rate hike in the upcoming policy meet and see the RBI raising policy rates to 5.15 per cent by calendar year end.

Any further rate hikes will be contingent on the inflation-growth dynamics and would be data dependent.

Hence, equity markets and debt markets have for the most part discounted this rate hike and market reaction would depend more on the statement of the RBI Governor hinting about the future course of action.

Ashish Chaturmohta, Director, Research Group at JM Financial Services

India is currently facing the heat of “imported inflation” owing to rising crude prices, supply chain disruption and global liquidity absorption.

Hence, to control the same, the government has played its role by reducing petrol and diesel prices, bringing in restrictions for exports in order to keep the domestic market stable etc, and on the other hand, the RBI has been very proactive in their actions, which was clearly visible from their 40 base points surprise rate hike.

It’s been the first time in the last several years that the RBI and the Government are both working in a synchronised way. We believe the rate hike would be 30-40 basis points along with a stable outlook on the GDP.

Mohit Batra, Founder and CEO of MarketsMojo

The RBI will try to tackle two issues in its upcoming monetary policy – tackle inflation and ensure that the rupee does not depreciate too much against the dollar. The last time when the RBI revised its inflation target, crude was at $100 per barrel, and now it’s trading at $120 per barrel, suggesting a risk of inflation flaring up is high.

Keeping these facts like rupee depreciation and high inflation rate, I expect RBI to hike the interest rate by 50 basis points.

Satish Kumar, Research Analyst at Choice Broking

We are estimating a repo rate hike of 40 basis points by the central bank in the coming monetary policy to contain the inflation which rose to 8-year high of 7.8 per cent in April. Upside risks to inflation remain elevated given the prevailing high crude oil and commodity prices amidst supply side concerns.

Pushpender Singh, MD of JMS Group

The outcome of the MPC meeting is pretty obvious, most probably leading to an inevitable hike in the repo rate in lieu of a concerted effort to lower the inflation rates, which perhaps is becoming a huge aberrant in the growth parameters of the economy. I do not expect to see a massive increase in the repo rate but definitely, a slight rise will be announced to curb the dwindles and shift the radar of growth in the right direction.

Aman Sharma, Director at Spaze Group

There are great chances of a repo rate hike yet again in a bid to control the inflationary rates that grow unabated despite direct attempts to stop it. It has to be accepted with a pinch of salt by the industries across the segments which will face teething troubles due to the probable hike after the RBI’s MPC meeting.

A surge in the repo rate is almost certain, I do not think there will be a sharp insurgence but somewhat a marginal increase to let the inflationary challenges deflate and the numbers drop.

Mohit Nigam, Head, PMS, Hem Securities

The repo rate is anticipated to be raised by another 40-50 basis points by the MPC. This decision is influenced by rising price levels as a result of ongoing geopolitical tensions and supply-chain pressures, which are driving inflation higher. The primary goal of the RBI would be to keep inflation under control and minimise its second-round impacts.

Inflationary pressures on food and fuel remain high, and supply-chain disruptions continue to put upward pressure on input costs. The biggest issue is that if rates are raised further, urban demand, which was formerly a major concern, may dwindle. Agricultural output will be supported by favourable weather conditions, thus rural demand may not be affected as much.

Ashish Khandelia, Founder of Certus Capital

We expect the repo increase to be between 40-50 basis points in upcoming MPC meeting with future increases leading to 5.75 per cent (where we were exactly 3 years ago) or upwards by the end of FY23. 40 basis points increase in May caused homes loans to move in to 7 per cent +/- range from 6.5 per cent earlier.

And by the end of this financial year, home loan rates will likely touch 8 per cent. This is unlikely to derail the housing momentum, but it will certainly soften it. Coupled with increasing prices, the growth may slow down a bit in FY23, after a record FY22.

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

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2 days ago

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February 21, 2025

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

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3 days ago

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February 20, 2025

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

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3 days ago

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February 20, 2025

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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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