Tag: RBi policy

Banking stocks gain ahead of RBI policy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Banking stocks lead the gains on Friday with Nifty Bank indices rising over half a percent ahead of the Reserve Bank of India’s (RBI) monetary policy announcement later today.

Among private lenders, IndusInd Bank, IDFC First Bank, HDFC Bank gained the most, while all the state-run lenders traded in the green with Maharashtra Bank, Central Bank, IOB, SBI, among others leading the pack.

The benchmarks Sensex and Nifty traded flat. The index to focus on will be Bank Nifty.

Meanwhile, HDFC Bank and Kotak Mahindra Bank seem to be making a comeback after a long time.

“While ICICI Bank and SBI are in a bull market of their own if the rally continues in HDFC Bank and Kotak Mahindra Bank, then perhaps the Bank Nifty can also make a move towards its peak. As of now, it is the only major index with some distance to its previous peak,” says CNBC-TV18’s Anuj Singhal.

The RBI is likely to maintain the status quo on the interest rates amid the hardening of retail inflation, while the governor’s commentary on the macroeconomic situation and any stimulus measures amid fears of a third wave of coronavirus pandemic will be keenly watched for.

Read here: RBI MPC Meet: Focus moves away from rate action to policy normalisation roadmap

With inflation remaining high, and uncertainty about a potential third wave of COVID-19 infections, all 10 economists polled by CNBC-TV18 said they do not expect any tinkering in the repurchase or repo rate (currently at four percent), which is the rate at which banks borrow from the central bank. According to the respondents, the reverse repo rate at which banks park excess funds with RBI is also expected to be left unchanged at 3.35 percent.

Meanwhile, other rate-sensitive stocks such as real estate and auto were also trading higher ahead of the RBI policy. Nifty Auto and Nifty Realty traded more than half a percent higher each.

Catch all the latest updates from the stock market here.

Catch LIVE updates from RBI Policy here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI August Monetary Policy: Central bank leaves repo rate unchanged; to remain ‘vigilant against possibility of 3rd COVID wave’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the third bi-monthly policy meet for the financial year 2021-22, governor Shaktikanta Das said on Friday.

With no change this time as well, the repo rate currently stands at 4 percent. The reverse repo rate has been maintained at 3.35 percent.

The central bank has left the key rates unchanged for the seventh consecutive time amid uncertainty over the pace of economic recovery as concerns rise over the third wave of COVID-19.

The MPC voted unanimously to keep policy rates unchanged. The central bank has maintained its policy stance at “accommodative” which could continue for as long as necessary to revive growth.

Repo rate is the rate at which banks borrow money from the Reserve Bank while reverse repo rate is the rate at which RBI borrows from banks. Commercial banks borrow funds only if they witness a shortfall in their funds. The monetary policy committee of a country uses the reverse repo rate as a tool to control the money supply in the country.

The announcement is in line with the Street’s expectations as it was largely expecting a status quo. A CNBC-TV18 poll conducted among 10 economists from India’s top banks and brokerages showed status quo with all respondents saying RBI would continue with the existing rates.

The MSF rate and bank rate remain unchanged at 4.25 percent.

According to Das, the economic activity has broadly evolved along the MPC’s expectations. However, he said that the RBI cannot afford to drop its guard and that it needs to remain vigilant against a possible third wave of the coronavirus pandemic.

Monsoon has revived after a brief hiatus, Das said. The CPI inflation surprised on the upside in May but the price momentum moderated later, he added.

The central bank said that the outlook for aggregate demand is improving but underlying conditions are still weak and more needs to be done to restore supply-demand balance in several sectors.

Follow our live blog on RBI policy here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI Policy: Governor Das delivers what the economy needs for now

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reserve Bank of India – the government’s debt manager, regulator of financial institutions, and lender of last resort – wears a heavy mantle. It has to walk a tight rope to maintain these balances.

By keeping rates on hold when it could not bring them down any further, promising to not reverse its easy money stance, and reassuring bond markets to ensure low borrowing costs for the government’s massive borrowing programme, RBI has done its bit. It went a step ahead and lent a helping hand to the most vulnerable sectors by directing credit to them, and giving banks incentives to lend to them.

Caught between slowing growth and rising inflationary pressures, the MPC decided to pause. It left rates unchanged, and said it would continue with its easy money policy “as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward”. This may well be the MPC’s default mode this entire year, according to several economists.

All this, despite the MPC revising its inflation forecast upward and growth forecast downward. It now sees India’s GDP growing by 9.5 percent in FY22, 100 basis points lower than its April forecast of 10.5 percent.

Although RBI has revised the retail inflation forecast upward by 20-30 basis points across July-March quarters, it also indicated that it would look through this for now.

For bond markets, RBI Governor Shaktikanta Das went all out. Through the accommodative stance, RBI signaled to the markets that it will not roll-back its easy money policy anytime soon.

RBI had committed to buying Rs 1 trillion worth of government securities via G-SAP 1.0 (Government Securities Acquisition Programme) in Q1 of this financial year, and has already bought Rs 60,000 crore worth of GSecs, with a promise to conduct an auction for another Rs 40,000 crore on June 17. It followed this up with the widely anticipated G-SAP 2.0, with a promise to buy an even higher amount of Rs 1.20 trillion in the second quarter.

Put together, the G-SAP 1.0 and 2.0 announcements are as good as an Open Market Operation (OMO) calendar, which the bond marketwallahs have been asking for. Das has given them no reason to complain, really. Given these measures were on expected lines, bond yields had factored them in already and hardly moved in trade on June 4.

Whether RBI can continue to pump in all this liquidity without stoking inflationary pressures in the economy, and at what point will it have to start the process of normalising the policy are not matters that seem to be of immediate concern for the central bank for now. Growth is priority and RBI has made that amply clear with its action and guidance.

As part of its emergency playbook, RBI has undertaken a series of measures since last year. From a sharp 115 cut in repo rates, a massive bond purchase programme, targeted lending to vulnerable sectors, loan repayment relief to small borrowers, to even allowing the much-frowned upon forbearance to lenders — RBI has done it all. It followed these up with more measures.

RBI expanded the scope of ‘Resolution Framework 2.0’ which it announced in the last policy, by allowing lenders to restructure loans of MSME, small business owners/individuals with exposure of up to Rs 50 crore, double from Rs 25 crore allowed earlier. This will help banks recast loans of a broader universe of borrowers that may have been affected due to COVID-19.

Secondly, it opened up an on-tap borrowing window of Rs 15,000 crores for contact intensive sectors. Under this scheme, banks can borrow money from RBI at prevailing repo rates of 4 percent with a 3 year tenor, and lend to sectors such as hotels, travel, tourism, salons, spas, aviation and ancillary sectors, bus operators etc. Further, to incentivise banks to lend to them, RBI has allowed them to park surplus liquidity with RBI at 40 basis points higher than the existing reverse repo rate to the extent of the Covid loan book they create with these contact intensive sector loans.

Third, RBI announced yet another special liquidity facility for SIDBI for Rs 16,000 crores in order to meet MSMEs’ short- and medium-term credit needs.

While all these are well-intended measures, they may not necessarily address risk aversion among lenders. For instance, of the Rs 10,000 crores special liquidity facility announced for small finance banks to lend to small borrowers on May 5, only Rs 400 crores was borrowed. This reluctance to lend may be driven by lenders’ worries about a rise in bad loans.

Governor Das went to the extent of assuring stakeholders that the central bank will not stop at this. If a need arises, RBI will step up, announce more measures.

Now it is over to the government.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Rate-sensitive stocks mixed after RBI policy announcement; banks fall, realty stocks in the green

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of rate-sensitive sectors were mixed after the Reserve Bank of India (RBI) kept the repo rate unchanged at 4 percent for the sixth consecutive time.

While banks and financial stocks were largely in the red, the realty index rose as much as 1 percent in intra-day deals and the auto sector added around 0.3 percent.

The RBI’s monetary policy committee maintained status quo on the key rates, in line with the expectations, amid uncertainty over the pace of economic recovery as India continues its fight against COVID-19. The RBI’s real GDP growth projection for FY22 is now 9.5 percent versus 10.5 percent earlier.

“Unlike the first wave of Covid-19, where economy came to a standstill, economic impact during the second wave will be contained,” governor Das said. CPI inflation has been projected at 5.1 percent in FY22.

In the banking space, most stocks were in the red with Bandhan Bank, IDFC First Bank, Punjab National Bank, HDFC Bank, SBI, and RBL Bank down 1-2 percent. Meanwhile, financials including Power Finance Corporation, REC, HDFC, ICICI Prudential, M&M Finance and Bajaj Finance were trading in the green.

Among other financials, ICICI General Insurance and Cholamandalam Finance were in the red, around half a percent lower.

In the auto space, M&M, Motherson Sumi, MRF and Hero MotoCorp were up 0.5-1 percent while Phoenix Mills, Brigade Enterprises, Godrej Properties, Sunteck Realty and Prestige Estates from the real estate sector were up in the range of 0.5 percent to 2 percent.

“The announcement of G-SAP 2.0 to the tune of Rs 1.2 lakh crore will ensure adequate liquidity in the system. On tap liquidity window for contact intensive sectors is an unconventional measure to mitigate the sufferings of segments like hotels, restaurants, tourism, bus operators, beauty parlours, saloons etc. Upward revision of inflation rate will raise bond yields marginally in the short run,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI projects FY22 real GDP growth at 9.5%; Q1 GDP growth seen at 18.5%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) projects India’s real GDP to grow at 9.5 percent in the financial year 2021-2022, lower than its earlier forecast of 10.5 percent growth during the year.

The RBI now estimates the real GDP growth of 18.5 percent in Q1FY22 as against 26.2 percent forecast earlier. Q2 GDP growth is seen at 7.9 percent versus 8.3 per cent earlier.

However, the RBI increased its growth forecast for Q3 and Q4. It now estimates 7.2 percent growth in Q3 as against 5.4 percent earlier and 6.6 percent in Q4 of FY 2021-22 as compared to 6.2 percent forecast earlier.

Announcing its monetary policy decision, the RBI Governor Shaktikanta Das said that the rural demand remains strong and the expected normal monsoon bodes well for sustaining its buoyancy, going forward.

The increased spread of COVID-19 infections in rural areas, however, poses downside risks, he added.

“Urban demand has been dented by the second wave, but adoption of new COVID-compatible occupational models by businesses for an appropriate working environment may cushion the hit to economic activity, especially in manufacturing and services sectors that are not contact intensive,” Governor Das in his policy statement.

On the other hand, the strengthening global recovery should support the export sector. Domestic monetary and financial conditions remain highly accommodative and supportive of economic activity, he said.

Moreover, the vaccination process is expected to gather steam in the coming months and should help to normalise economic activity quickly.

The RBI’s Monetary Policy Committee (MPC) decided to maintain the status quo on key policy rates. The MPC voted unanimously to leave the repo rate unchanged at 4 percent. The MSF rate and bank rates also remain unchanged at 4.25 percent.

It also continued with the accommodative stance until necessary to mitigate the impact of COVID-19 pandemic.

Check Live Updates on RBI Policy here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI policy preview: With likely status quo on rates, market awaits growth and liquidity outlook

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Monetary Policy Committee of the Reserve Bank of India is expected to leave rates unchanged for the sixth consecutive policy amid uncertainty about the economic fallout of the second COVID-19 wave.

A poll conducted among 10 economists from India’s top banks and brokerages showed that the MPC will hold the repurchase or repo rate at 4 percent in the June policy. Repo rate is the rate at which the banks borrow money from the Reserve Bank. The MPC is also expected to leave the reverse repo rate, or the rate at which RBI borrows from banks, unchanged at 3.35 percent, the poll showed.

“The central bank looks set to keep all the key policy rates unchanged in June. More importantly, despite emerging signs of higher inflation prints, one expects the MPC to stay decisively growth supportive in the coming,” said Siddhartha Sanyal, Chief Economist at Bandhan Bank.

Eight out of ten respondents CNBC-TV18 polled said that the MPC will continue with a status quo on repo rates throughout the financial year.

On the reverse repo front, however, a majority expects a hike of anywhere between 25-50 basis points during the course of the fiscal.

“We expect the policy stance to remain unequivocally accommodative throughout the current financial year. While there is virtually no scope for a further cut in interest rates given the increased commodity prices and the rising WPI, the status quo on rates is likely to continue for a long time possibly till the end of FY22. Despite the risks of a build-up of inflationary pressures in the near term, RBI is likely to give higher priority to the concerns around growth recovery,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.

With the second wave resulting in economic uncertainty, the odds of normalisation of policy and rollback of rate cuts seem low, and the focus has squarely shifted to the central bank’s measures to help economic recovery.

“The better-than-expected GDP numbers provide much-needed comfort to the MPC on the growth outlook.  However, with the imposition of partial lockdown-like restrictions to contain the virus spread in several parts of the country, the downside risk on growth recovery has intensified. Hence, the RBI is likely to continue with its accommodative monetary policy stance in the decision of the MPC meeting to be announced on 4 June 2021,” said Dr M Govinda Rao, Chief Economic Advisor of Brickwork Ratings.

Sixty percent of the respondents said that the RBI would slash its GDP growth forecast of 10.5 percent for FY22 to below 10 percent. Ninety percent said that the first quarter growth estimate of 26.2 percent would also be lowered, with a wide range of 12-25 percent given by various economists polled by CNBC-TV18.

The monetary policy statement will also be important to anchor inflation expectations, especially given the worry about rising inflationary pressures in what is a still-weak economy.  A majority of the economists polled said they expect RBI to retain the retail inflation forecast of 5.2 percent for the first and second quarter of the fiscal year.

All the respondents said RBI would continue to maintain its accommodative policy stance at least until the end of the calendar year, with half expecting it to be retained until March 2022.

The market is also watching for any announcement on the government securities acquisition programme or G-SAP. In the last policy in April, RBI said it would buy Rs 1 trillion worth of government securities by the first quarter of FY22 to keep the yield curve at comfortable levels. Several economists polled said they expect a GSAP 2.0 to be announced in the June policy.

Besides these, market participants will also watch out for any other announcements relating to regulatory forbearance, any relief measures for Covid-impacted sectors, other regulatory announcements from the Governor on Friday.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here are key stocks that moved the most on April 7

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian shares ended around a percent higher on Wednesday after the Reserve Bank of India (RBI) held a repo rate, as widely expected, to support the economy against the backdrop of the second surge in COVID-19 cases.

The Reserve Bank of India (RBI) stuck to its accommodative monetary policy stance amid concerns that rising infections could derail the country’s nascent economic recovery.

The Sensex ended 460 points higher at 49,662 while the Nifty rose 135 points to settle at 14,819. The broader markets also rose in trade with the midcap and smallcap indices up 1.3 percent and 1.7 percent, respectively.

On the Nifty50 index, JSW Steel, Wipro, SBI Life, SBI and IndusInd Bank were the top gainers while Adani Ports, Tata Consumer, UPL, Titan and NTPC led the losses.

Here are the key stocks that moved today:

Barbeque Nation: Shares of Barbeque Nation Hospitality rebounded after making a weak market debut and were locked in the upper circuit of 20 percent at Rs 590.40 on the BSE in Wednesday’s session. The stock of Barbeque Nation Hospitality, which owns and operates the popular chain of Barbeque Nation Restaurants, had opened at Rs 492, 1.6 percent lower against its issue price of Rs 500 per share on the BSE.

Rate Sensitive stocks: Rate sensitive stocks continued trading in the green as RBI’s monetary policy committee (MPC) held the repo rate at 4 percent in the April policy and retained its ‘accommodative’ stance which could continue for as long as necessary to revive growth. Nifty Bank was up 1.5 percent, Nifty Auto rose 1.6 percent and Nifty Realty added 0.9 percent after the policy announcement.

Reliance Industries: RIL share price rose 1 percent after the company’s subsidiary Reliance Jio signed an agreement with Bharti Airtel for acquiring the right to use spectrum in some parts of the country. Reliance Jio Infocomm has entered into a definitive agreement with Bharti Airtel for the acquisition of the right to use spectrum in the 800MHz band in Andhra Pradesh, Delhi and Mumbai circles through spectrum trading, RIL said in a BSE filing.

Rossari Biotech: Shares of Rossari Biotech advanced 3 percent, its highest level since listing on the bourses on July 23 last year. Thus far in the month of April, the specialty chemicals company’s stock has soared 16 percent in the four trading days, after the company announced full commissioning of its Greenfield manufacturing facility at Dahej, Gujarat.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GSAP is not a one off measure, there will be more going ahead: RBI Guv

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday said that the G-Sec acquisition program (GSAP) is in addition to normal instruments in their toolkit for liquidity management.

“It is not a one-off measure. There will be more going ahead,” he said while addressing a press conference.

“Our signals, actions and communication must be read together. G-SAP is different from the usual OMO calendar. We have conducted total OMOs of Rs 3.13 lakh crore in FY21,” he added.

RBI has decided to put in place a secondary market Government Security Acquisition Programme (G-SAP) 1.0 for orderly evolution of the yield curve in FY22.

In the first quarter (Q1), the central bank will be conducting G-SAP aggregating Rs 1 lakh crore, where the first purchase of Rs 25,000 crore will be done on April 15, Das said.

“RBI will commit to upfront buying of G-secs. It will ensure financial stability and G-sec stability from global uncertainty,” Das earlier said while making policy announcements.

According to him, RBI will continue to deploy its regular operations under the LAF, longer-term repo/ reverse repo auctions, forex operations and open market operations, including special OMOs, to ensure liquidity conditions evolve in consonance with the stance of monetary policy and financial conditions are supportive for all stakeholders.

LAF is Liquidity Adjustment Facility while OMO refers to Open Market Operations.

The central bank also announced that it will conduct 14-day Variable Rate Reverse Repo (VRRR) auctions of longer maturity as indicated in the Revised Liquidity Management Framework announced on February 6, 2020.

The amount and tenor of these auctions will be decided based on the evolving liquidity and financial conditions, RBI said.

The Monetary Policy Committee (MPC) of the Reserve Bank, meanwhile, held the repo rate at 4 percent in the April policy and retained its accommodative stance for as long as necessary amid rising inflation and elevated inflation.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow