Business
RBI’s monetary policy meet: Here’s some of the expectations
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.
Business
‘Innocent Unless And Until Proven Guilty’: Adani Group Issues Statement In The US Bribery Indictment; Denies Charges, Calls Them Baseless
The Adani Group, which has been at the eye of the storm since the beginning of the new day, has issued a statement in the US Indictment matter.
Adani Denies Charges
The company, in a statement procured by the conglomerate-owned IANS, said, “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied.”
Furthermore, the statement asserted its stance and added, “As stated by the US Department of Justice itself, “the charges in the indictment are allegations and the defendants are presumed innocent unless and until proven guilty.” All possible legal recourse will be sought.”
Committed to Highest Standards
The Adani Group further added that it has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations.
US Court Indicts Adani and Co.
The company, in an attempt to assuage stakeholders, partners and employees, said that the company is a law-abiding organisation, fully compliant with all laws.
The storm was kicked off by a post from short-seller group Hindenburg, which shared the news of the US Federal Court’s indictment of Gautam Adani and seven others associated with the company.
Billionaire Gautam Adani has been charged by US prosecutors for allegedly being part of a scheme to pay over USD 250 million (about Rs 2,100 crore) bribe to Indian officials in exchange of favourable terms for solar power contracts.
The press release from the US court elaborated on the allegations and claimed that the company and its leadership had indulged in mass bribery activity, in which the company bribed Indian officials to bag a contract for its Adani Green Energy company.
This in turn led to misleading American investors and global financial investors.
The court reportedly also issued an arrest warrant against Gautam Adani and seven others.
Adani Shares Tank
In the aftermath of the report, Adani Group company shares tanked at Dalal Street. With Adani Enterprises shares hitting the lower circuit, losing 20 per cent of their value. The situation was the same with the other Adani stocks, including Adani Green Energy, which is in the middle of the new storm.
Business
Bharat NCAP Awards 5-Star Crash Test Rating to Mahindra Thar Roxx
The Mahindra Thar Roxx has earned a prestigious 5-star rating in Bharat NCAP’s latest crash tests, reflecting its commitment to safety. Recently evaluated under stringent testing, the SUV excelled with a 31.09 out of 32 score for adult occupant protection and 45 out of 49 for child safety.
Tested in its AX5L and MX3 variants, the Mahindra Thar Roxx delivered notable results, scoring 15.09 out of 16 in the Frontal Offset test and a perfect 16 out of 16 in the Side Impact test. The assessment revealed strong protection for most areas, with adequate ratings for the driver’s chest and lower legs.
The Mahindra Thar Roxx has received high marks for child occupant safety, scoring 24 points in Bharat NCAP tests, along with 12 points for CRS (Child Restraint System) installation and a Vehicle Assessment Score of 9. This top-tier safety rating applies to all Thar Roxx units produced from November 2024 onward, underscoring Mahindra’s dedication to enhancing safety features across its SUV range. Additionally, Mahindra’s XUV400 and 3XO models have also achieved 5-star safety ratings, further emphasizing the automaker’s commitment to robust safety standards.
The Mahindra Thar Roxx offers two interior themes – Classic Ivory and a new Dark Mocha Brown. Comfort and convenience are prioritizing with ventilated seats, leatherette upholstery, a digital driver display, a larger 10.25-inch touchscreen, a high-quality Harmon Kardon sound system, a panoramic sunroof, rear AC vents, wireless connectivity for Apple CarPlay and Android Auto, and a six-way adjustable driver’s seat, combining practicality with luxury.
Mahindra Thar 5-door comes packed with safety and interior upgrades to enhance its appeal. On the safety side, it includes essentials like six airbags, three-point seatbelts for all occupants, hill control features, electronic stability control, and a seatbelt reminder. Advanced driver-assist features, such as autonomous emergency braking, adaptive cruise control, lane-keeping support, lane departure alerts, and a 360-degree camera system with blind spot monitoring, add an extra layer of protection.
Mahindra Thar Roxx offers two engine choices: a 2.0-litre turbo-petrol and a 2.2-litre diesel. The petrol engine comes in two setups—150 bhp and 330 Nm of torque for the manual, and 174 bhp with 380 Nm for the automatic. The diesel option is available only with four-wheel drive.
Business
Why The Indian Stock Market Struggled: Inflation, FPI Outflows, And Currency Pressure; Everything You Need To Know
The Indian stock market on Wednesday (November 13) wrapped the another challenging day, marking the fifth consecutive session of losses.
The Sensex and Nifty, the two benchmark indices, both ended lower amid concerns over inflation and a broad selloff in metal stocks.
Market Snapshot
By the close of the trading session, Sensex was down by 984.23 points, or 1.25 per cent, ending at 77,690.95. Nifty 50 followed suit, shedding 324.40 points, or 1.36 per cent, to settle at 23,559.05.
The day saw a sea of red on both the Sensex and Nifty, with the majority of stocks ending lower. Among the few gainers were NTPC, Tata Motors, and Infosys, which saw minor upticks on BSE.
However, the broader market was dominated by heavy losses, especially in stocks such as JSW Steel, State Bank of India (SBI), Adani Ports, Mahindra & Mahindra (M&M), and Tata Steel, all of which posted declines.
Reasons behind the sharp decline
One of the major factor contributing to the market’s downward trajectory is the growing concern related to inflation.
As per the data which released by the Ministry of statistics and Programme Implementation regarding the India’ retail inflation, it showed that for the month of October, it surged to 6.21 per cent, breaching the Reserve Bank of India’s (RBI) upper tolerance limit of 6 per cent for the first time in over a year. The primary factors that contributed to surge include rise food prices, driven by the extended monsoon season and crop damage.
Adding to the pressure is the continued outflow of foreign portfolio investments (FPIs). On November 12, FPIs sold shares worth Rs 364.35 crore, bringing the total outflows for November to Rs 23,911 crore
The Indian rupee also struggled on November 13, weakening by 1 paisa to close at 84.38 against the US dollar.
The rise of the US dollar, which surged 1.8 per cent in November, has been exacerbated by the US presidential election result and higher bond yields. The US 10-year bond yield spiked to 4.42 per cent, further diverting capital away from emerging markets like India.
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