What is the street expecting from the RBI policy meet? The 46% of the street is expecting the Reserve Bank of India to cut the repo rate by 25 bps, but 54% is expecting to maintain the status quo as RBI has front-loaded repo rate cut.What are market expectations from RBI policy meet?
The open interest (OI) of the front month contract jumped 29% as its price tumbled almost 9% to Rs 1215.95 from the intraday high of 1332.5.
The expectation of an announcement of the stimulus package from the US kept the dollar under pressure.
The Nifty Realty index was trading 1.51 per cent up at 205.45.
The Nifty Bank index was trading 0.36 per cent up at 21587.8.
The Nifty Auto index was trading 0.51 per cent down at 7450.8.
Nifty is likely to see a tentative start and the 11,065 and 11,200 levels are likely to act as key resistance points.
The monetary policy committee (the MPC) will meet in the first week of August 2020 to deliberate and are likely to have their task cut out with the economy staring at a contraction and the need to manage inflation.
Rates steady, gold LTV ratio raised, MSME debt restructuring extended: Analysing the key RBI policy announcements
The Reserve Bank of India on Thursday kept interest rates on hold to contain elevated inflation, even as it allowed banks to restructure some corporate and individual loans as part of efforts to revive the economy that faces its first contraction in more than four decades. There will be separate windows available for the restructuring of loans of small and mid-size enterprises who have been impacted by the COVID-19 pandemic. The central bank also raised the limit of loans that can be availed against gold ornaments and jewellery. Tune in as ET's consulting editor TK Arun shares his views on the key highlights of the RBI policy statement. (Text: PTI)Rates steady, gold LTV ratio raised, MSME debt restructuring extended: Analysing the key RBI policy announcements
Domestic equity benchmark Sensex jumped over 150 points in opening session on Thursday ahead of the Reserve Bank of India's monetary policy outcome. The BSE Sensex was trading 183 points or 0.49 per cent higher at 37,846.33; while the NSE Nifty was up 52.70 points or 0.47 per cent at 11,154.35.Sensex gains over 150 pts ahead of RBI policy outcome; Nifty tops 11,150
Here are some of the key factors expected to move the market in the week ahead.
"We have not exhausted our policy options, whether it relates to rate cuts or any other aspects of central banking. We have not exhausted our instruments or ammunition," he said.
Sensex falls 477 points from day's high on profit booking, ends 25 points lower; all eyes on RBI policy outcome
The continued rapid surge in coronavirus infections also bothered investors. For the seventh day in a row India registered more than 50,000 new Covid-19 cases, taking the total tally past the 19-lakh mark.
Some brokerages see scope for one more rate cut but said the central bank’s focus is likely to be on financial stability measures.
The MPC typically meets bi-monthly and comprises of six members.
This is how economists and market analsysts reacted to RBI's move to slash repo rates.
Analysts said the step was in the right direction and would cover roughly 50-55 per cent of the loans in the banking system.
RBI gave more freedom to banks to deal with loans while keeping mum on moratorium. The monetary policy committee (MPC) said India’s GDP growth is likely to slip in the red during the fiscal year.
“While the sector was looking at a further revision in the policy rate, to boost demand, we appreciate the accommodative stance by the RBI, in the wake of a high rate of inflation which may have necessitated keeping policy rates unchanged,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
The Reserve Bank of India held its policy rate in its monetary policy review held today in line with market expectations.
‘Even if the headline print is slightly higher than the RBI’s comfort in the latest print, the pressure for the RBI to deliver more rate cuts is quite strong.’
It is going to be a tightrope walk. So there is no one answer to this.
Street analysts are expecting further rate cuts from the Shaktikanta Das-led panel
"Rate cuts so far have had little impact on demand stimulation or growth," said Shanti Ekambaram, Group President for Consumer Banking at Kotak Mahindra Bank.
The central bank has already reduced the repo rate by a total of 115 basis points since February, on top of the 135 basis points in an easing cycle last year, from 6.50 per cent.
Das has already led the Monetary Policy Committee in cutting interest rates by 115 basis points this year, taking the repurchase rate down to 4%, the lowest since it was introduced in 2000.
One of the key reasons why this is likely to get debated is the recent CPI data (consumer inflation).
The general expectation is that the rise in inflation has been due to supply shocks while demand pressures will remain leading to lower inflation by Q4 of FY21.
"We believe an August rate cut is unlikely. We believe that the MPC could now well debate what further unconventional policy measures could be resorted to in the current circumstances to ensure financial stability is continued to be addressed," an SBI research report- Ecowrap said.
RBI kept the policy rates unchanged in the bi-monthly MPC meet today. Debt mutual fund managers say the move is in line with the market expectations.
Reserve Bank Governor Shaktikanta Das on Friday said about Rs 3.74 lakh crore liquidity on aggregate basis will be infused into the financial system to deal with the COVID-19 pandemic.RBI to infuse Rs 3.74 lakh cr liquidity into financial system
The Reserve Bank of India on Thursday said it would conduct long-term repo operations, whereby it would inject money into the banking system at the policy repurchase rate for one and three years.
Four-year sovereign bonds are now yielding 6.07 percent dropping about 14 basis points since Wednesday.
With economy showing visible signs of green shoots, RBI decided to focus on taming inflation.
The Nifty Realty index was trading 0.12 per cent down at 326.
The Nifty Auto index was trading 0.55 per cent up at 8176.05 .
The six-member monetary policy committee (MPC) on Thursday decided to keep its short-term lending rate -- repo rate rate -- unchanged at 5.15 per cent in the sixth bimonthly policy review of the ongoing financial year. The central bank's Monetary Policy Committee (MPC) decided to leave the key repo rate unchanged at 5.15% and the reverse repo rate at 4.9%.RBI keeps repo rate unchanged at 5.15% amid accelerating inflation
The Reserve Bank of India (RBI) Governor Shaktikanta Das-headed monetary policy committee (MPC) on Thursday maintained status quo on policy rates in its 5th bi-monthly monetary policy review of the financial year. This came after five consecutive cuts. The short-term lending rate, or repo rate, was unchanged at 5.15 per cent.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent to 97.79.
‘We are more than willing to do what is necessary but it needs to be targeted in the right place’
‘RBI has ignored the restructuring problem and moved ahead with minor tweaking of just three months’
‘Hospitality, airline, hotels and real estate are sectors where a lot of jobs get created’
‘Government will ensure that public sector banks at least fall in line’
The silver lining, if any, comes from the agriculture sector, says RBI.
India VIX, the measure of volatility in the market, dropped further 4.8 per cent to 68.09.
The monetary policy committee recognised that there is policy space available for future action.
Chetan Ghate noted that the counter-cyclical money policy had been ineffective.
The issue of lack of monetary transmission hasn't cropped up suddenly and is something that has been a matter of concern for the RBI in ensuring the pass-through of its policy decisions. The matter snowballed in the last few months after the RBI observed that the effects of its rate cuts are not being felt in terms of interest rates coming down.
RBI today surprised everyone by keeping the policy rates unchanged, contrary to expectations of 15-25 bps cut.
The Nifty Realty index was trading 0.47 per cent up at 286.70.
The Nifty Auto index was trading 0.28 per cent up at 8019.2 .
The central bank slashed FY20 real GDP growth projection to 5% from 6.1%.
The repo rate now stands at 5.15 per cent, the lowest since March 2010.
If the thousands of stuck projects all over the country get completed, not only will the NPL issue get partly addressed, but more importantly, it will give confidence to home buyers to purchase real estate in a stronger manner, says Keki Mistry, VC & CEO, HDFC.
There will be no downgrade of commercial realty loans if the delay is genuine, said RBI.
The Reserve Bank of India held key policy rates in its policy review today to keep the delicate balance between inflation management and revival of growth.
The Nifty Bank index was trading 0.18 per cent up at 31057.25 .
"USDINR pair is expected to quote in the range of 71.05 and 71.50,” said Motilal Oswal Financial Services.
When bond yields dip, prices of the instruments rise.
Over 700 companies will announce their financial results for the December quarter this week.
The RBI today announced a bazooka for borrowers, giving them a three-month moratorium on loan repayment.
Pawar, who is also the Maharashtra's finance minister, said the Central bank should issue clear instructions regarding the three-month moratorium. "Banks will not heed just requests. The RBI decisions announced today will partially help revive the economy, which is affected by the coronavirus outbreak," he said.
Along with moratorium, SMEs will need fresh funds also, says Edelweiss Chairman.
As far as the moratorium is concerned, we want to work with individual borrowers, says MD &CEO, Axis Bank
FM Nirmala Sitharaman had yesterday announced a Rs 1.70 lakh crore mega rescue package for the country's poor. This, along with today's RBI moves that will eventually release Rs 3.74 lakh crore of liquidity into the system, forms the frontline of India's response to the menace. Here is a look at how India is front-loading its countermeasures.
Three-month moratorium will help banks' re-assessment mechanisms, says Board Member, RBI.
MPC will continue with the accommodative stance as long as it is necessary, says RBI.
“Given this heightened volatility, unprecedented uncertainty and extremely fluid state of affairs, projections of growth and inflation would be heavily contingent on the intensity, spread and duration of COVID-19. Precisely for these reasons, the MPC refrained from giving out specific growth and inflation numbers,” Reserve Bank of India Governor Shaktikanta Das said.
Make no mistake, it is a fight never seen before, Das warned while outlining the risks to Indian economy .
The unanimity reflects that MPC is more wedded to its mandate of keeping inflation at 4%.
Not a single economist among the 43 surveyed by Bloomberg News predicted no rate cuts happening.
CPI inflation projection wad revised upwards to 5.1-4.7 per cent for the second half of FY20.
This halt came after five consecutive cuts. The shortterm lending rate, or repo rate, was unchanged at 5.15 per cent.
While rate cut of 25 bps was in line with consensus estimates, it was below bond market’s expectations.
The Reserve Bank of India (RBI) on Friday, cut key policy rates by 25 basis points for the fifth time this year.
Here’s how Dalal Street experts and economists reacted to the RBI policy outcome.
It was in addition to a cumulative 110 bps rate cut that RBI has announced so far this year.
Bears were back in control, with eight shares in the red for every five that advanced on BSE.
In September, the rupee appreciated after FM Nirmala Sitharaman announced corporate tax cut.
The Nifty Bank index was trading 0.21 per cent up at 32,047.10 .
Patra said indicators were not offering evidence yet that the downturn was bottoming out.
Passive inflation and the central bank’s full tank of gas make the case to cut even stronger.
We expect the spread of sovereign curve over repo to compress even more as we go along.
RBI has linked pricing of loans by all commercial banks for the medium enterprises to an external benchmark, effective April 1.
MPC in a statement said the virus may impact tourist arrivals in India and global trade.
The central bank raised its inflation projection, saying that outlook on prices remains uncertain. The Monetary Policy Committee (MPC) maintained the accommodative stance.
After three-day deliberations, the Monetary Policy Committee (MPC), headed by Reserve Bank of India (RBI) Governor Shaktikanta Das, observed that the economy continues to be weak and the output gap remains negative.
Going forward, the inflation outlook is likely to be influenced by several factors like food inflation, crude prices and input costs for services, RBI said.
The move will free up some reserves for banks to lend and revive consumption demand in these sectors.
The RBI maintained it accomodative stance to support growth and said that there is policy space available for future action
Following the RBI's Monetary Policy Committee (MPC) decision, the local currency witnessed heavy volatility.
The Reserve Bank of India today relaxed bank lending norms to non- banking finance companies and eased bank’s exposure limits to help the sector under stress.
The RBI MPC will announce its third bi-monthly policy of the ongoing fiscal today.
The Nifty Realty index was trading 0.74 per cent up at 264.40 around 09:55 am.
The Nifty Auto index was trading 0.05 per cent up at 6945.75 around 09:46 am.
The Reserve Bank of India (RBI) in December had kept interest rates unchanged after five consecutive cuts.
The fear is that just RBI was behind the curve earlier, it might find itself ahead of the curve in the near future.