Rate sensitive sectors such as banks, realty, auto and capital goods were trading in a rage on Tuesday, ahead of the RBI policy review.
Sensex surged as much as 109 points in trade on Tuesday, ahead of Reserve Bank of India's crucial bi-monthly monetary policy review.
"A small trigger would be the December 8th RBI policy review and the big trigger would be what really happens in the state elections. "
Q4 results would be a mixed bag for banks; one may face disappointment in certain pockets, including PNB, OBC, Bank of Baroda, and Bank of India, says Shah.
"Policy action is largely over and done with. WPI is largely irrelevant from the RBI’s standpoint. So yes, it is just one more number on the table."
Many things that RBI governor Raghuram Rajan did in his first full-fledged monetary policy review were unconventional.
Bankers remained ambivalent on the impact of today's policy announcement by Reserve Bank on the cost of funds.
At 11:35 hrs the 10-benchmark government securities were trading at 8.59%, down four basis points from early morning trades.
The S&P BSE Banking index was trading 1.03 per cent higher at 12,303, while the BSE Auto index was trading 0.9 per cent higher at 11,901.
At 10:35 hrs, the 10-year benchmark government securities were on Tuesday trading at 8.64%, little changed from yesterday’s closing price. Total volume was low at around Rs 3,030 crore.
Sinha said that deposit growth has been a little slower than the past, but there is plenty of deposit in the system to finance projects.
India Inc, however, welcomed the RBI's move to slash key interest rate by 0.25 per cent, saying it will improve the cost of credit.
The 25 bps lower policy rate announced Tuesday along with the benefits arising from marginal cost based funding to make borrowing cheaper immediately.
“In Budget 2016-17, the govt has adhered to the path of fiscal consolidation and this will support disinflation going forward,” RBI said in its statement.
We are going to get a crunch in valuations again globally very soon
We prefer consumer goods simply because the urban consumption has held up strong and if we have a La Nino this time, we shall have an uptick in rural consumption.
Interest rate sensitive banking and realty stocks today attracted strong buying, surging up to 22.5 per cent ahead of the RBI's mid-quarter monetary policy.
Inflation and forex market conditions are expected to weigh on the Reserve Bank decision as it reviews monetary policy later this week.
Disappointing results from PNB also hurt market sentiment as banking shares had risen sharply over the past few months on expectations of a recovery in the sector.
The Reserve Bank of India left repo rate unchanged at 7.75 per cent and CRR at 4 per cent. It cut SLR by 50 bps to 21.50 per cent from 22 per cent.
Rate sensitive stocks came under pressure, after the Reserve Bank of India on expected lines left repo rate unchanged at 7.75 per cent.
According to a poll, 80% of poll participants says that RBI will not cut rates, while 20% bankers are predicting a 25 basis points repo rate cut.
Profit-booking in recent outperformers, disappointing earnings from some bluechips and mixed global cues also weighed on the sentiment.
"Government can disinvest by bits and pieces every month instead of leaving the big ticket divestment for the end of the year"
Tensions between the government and the RBI governor came out in the open as PM called for “fresh thinking” on macroeconomic policy.
Today's monetary policy announcements will be the last major action by Reserve Bank Governor D Subbarao, unless he gets another extension.
RBI's comments raised questions about it's resolve in sustaining cash-draining measures that have sent bond yields surging.
The S&P BSE PSU index was trading 2% lower, followed by the BSE Realty index which was down 2.1%, while the BSE Banking index plunged 0.4%.
RBI continuous efforts to stem rupee fall seems to paying off as the Indian unit is not only is off its all-time low of 61.21 but has turned around to trade at more than a one-month high today.
Gitanjali Gems fell by its daily limit of 20% and was locked in lower circuit at Rs 400.90. PC Jeweller was down 10.36%, while TBZ fell 12.85%.
The S&P BSE Sensex slipped over 150 points after the RBI maintained a status quo in its policy meet today.
At 09:20 a.m.; the 30-share index was at 28534.62, down 25 points or 0.09 per cent. It touched a high of 28536.64 and a low of 28474.09 in trade today.
The S&P BSE Sensex snapped three-day rally and slipped as much as 155 points in trade, led by losses in power, oil & gas, metal and realty stocks.
Moody's downgraded Japan's sovereign debt rating by a notch to A1 from Aa3, citing heightening uncertainty over the country's ability to hit its debt-reduction goal.
Rate sensitive stocks cracked in after the RBI maintained status quo on policy rates. Here are technical recommendations on top ten such stocks.
The rupee strengthened 9 paise against the US dollar after the Reserve Bank of India's mid-quarter monetary policy announcement.
As we have pointed out in the past, the repercussions of banks blindly following the RBI's diktat go well beyond the banking sector.
The RBI is scheduled to announce the mid-quarterly review of its monetary policy on March 15, a day before the presentation of the Union Budget in Parliament.
Any further movement in rate sensitive stocks will be more a function of their quarterly numbers and expected growth in future.
Ahead of the monetary policy announcement by the Reserve Bank of India, the 10-year bond yield went up.
"I don't think the RBI is wrong. The RBI’s policy of wait-and-watch is entirely in keeping with the uncertainty that we are seeing globally."
"We are on course to achieve the inflation target. It clearly suggests that any further rate cuts were not warranted at this point."
The market had surged 250 points after the policy meeting; led by gains in rate sensitive sectors such as capital goods, banks, auto and realty.
"The downside risk has perhaps receded a little when compared to what it was in the last policy; and I read that as mildly positive."
"While others are saying there were no surprises in the policy, I for one found a little surprise and a pleasant one at that."
"There are some steps that can help in addressing this malady. The government needs to provide from subvention for infra investments like it does to exporters."
"We are looking at about 7.5% or so of GDP growth. I will tell you why. Over the last few months, the government has undertaken a series of reform measures."
A fall in interest rates will be a big booster for the banks as well as for the debt-laden companies. Most analysts expect up to 100 bps cut in repo rate over the next 12 months.
"The RBI will have to take some steps regarding liquidity — either by way OMOs or cancellation of some of the auctions. It's the only thing that can give some comfort to the markets."
"There is a good chance this time around that inflation may not go up as much as expected. Besides, the pay panel award may have already been priced in by the markets."
"We need to understand that the Fed looms large. It is going to be a very legitimate risk for all emerging markets including India."
"We are already at 6.75%, while the long-term CPI inflation is around 7%. This means we are marginally negative in terms of the real policy rate."
Reserve Bank Governor Raghuram Rajan will announce the fifth bi-monthly monetary policy review on December 1.
India Inc today welcomed the 0.25 per cent interest rate cut by the Reserve Bank saying it would help revive confidence of industry.
BSE Auto Index was trading 0.7 per cent higher, led by gains in Ashok Leyland which was up 1.3 pc, and Bajaj Auto which rose 1.6 pc.
Following today's negative performance, markets are likely to trade slightly in negative zone ahead of the RBI meet.
Investors will remain cautious ahead of RBI’s mid-quarter monetary policy. The decision on key policy rates is likely to set the trend for the market this week.
The Reserve Bank of India left key interest rates on hold on Thursday, as expected, after six increases since March. Lets see what experts have to say:
The BSE Banking index pared gains and plunged in deep red after the RBI in its policy meet on Tuesday kept the repo rate unchanged at 8%.
Raghuram Rajan assured investors that short-term risks are more balanced currently and the RBI has room to cut rates if disinflation continues.
100 per cent respondents to ET Now poll expect the key rates and cash reserve ratio to remain unchanged.
If the Bank Nifty does not have any kind of negative event, the market momentum should spill over and we might actually see a breakout above 7700.
"In all probability, looking at the kind of inflation numbers which came in yesterday, my sense is a 25 bps cut is definitely expected."
'RBI is likely to cut key interest rates by 0.50%, to 7.5%, in the forthcoming monetary policy review.'
“I would characterise (the policy) as neither conservative nor aggressive. It’s in some sense a Goldilocks policy — just right given the current situation,” he said.
RBI today left the short-term lending (repo) rate to banks, and the cash reserve ratio (CRR) -- the amount of deposits banks have to park with RBI-- unchanged.
Leading economists today said the RBI decision to keep the key policy rates unchanged was on expected lines.
Rate-sensitive stocks gained momentum in an otherwise weak market on Monday, ahead of the Reserve Bank of India’s policy review on Tuesday.
Now it is actually time to tighten up the stops and hold your long positions, not really look to create fresh ones.
The policy has shown a practical approach, but it is not certain if can have any sizeable impact on the exchange rate front, says AV Rajwade.
Realty firms and property consultants today expressed disappointment over RBI's decision to keep key policy rate unchanged.
"I can see that the RBI remains concerned about inflation. I think we need to watch what happens in inflation but probably the need to push the growth at this moment is little higher on agenda than the concern about inflation," Ahluwalia told.
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