The Nifty and the Sensex opened the day with marginal losses but managed to recuperate them to trade higher in the green.
The Reserve Bank of India's monetary policy committee has unanimously voted to keep lending rates unchanged this morning.
Join us as we follow the top business news through the day.
Why low interest rates may not last forever
Sensex rallies 327 points post RBI policy outcome; extends gains for 7th day
Stocks are on a roll backed by various positive cues.
PTI reports: "Equity benchmark index Sensex rallied 327 points on Friday, extending gains for the seventh straight session on the back of financial stocks after the RBI left benchmark rate unchanged but decided to maintain an accommodative stance.
RBI Governor Shaktikanta Das’ comments on expectation of GDP turning positive in the January-March quarter of the current financial year also fuelled the market rally, traders said.
The 30-share BSE index ended 326.82 points or 0.81 per cent higher at 40,509.49 while the broader NSE Nifty rose by 79.60 points or 0.67 per cent to 11,914.20.
ICICI Bank was the top gainer in the Sensex pack, rising around 3 per cent, followed by Axis Bank, HDFC twins, SBI, L&T, ONGC and Infosys.
On the other hand, Sun Pharma, Asian Paints, Nestle India, UltraTech Cement and HUL declined.
Rate-sensitive banking and financial stocks ended on a positive note, with BSE bankex and finance rising up to 2.64 per cent, while realty and auto indices closed in the red.
While announcing the MPC decisions, RBI Governor Shaktikanta Das said the benchmark repurchase (repo) rate has been left unchanged at 4 per cent.
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
Das said the Indian economy is entering into a decisive phase in the fight against coronavirus.
He also stated that the contraction in economic growth witnessed in the April-June quarter of the fiscal is “behind us”, adding that the GDP was likely to turn positive at 0.5 per cent in the January-March quarter of the current financial year.
The policy review outcome was as per expectations, but it was the good commentary on GDP outlook and the liquidity measures announced that cheered the D-Street, said Jimeet Modi, Founder and CEO of Samco Group.
The central bank has given forecast of 9.5 per cent contraction in GDP this fiscal but the silver lining lies in the expectations of GDP growth possibly turning positive by January-March quarter (Q4),” said Gaurav Dua, SVP, Head - Capital Market Strategy & Investments, Sharekhan by BNP Paribas.
Overall, the monetary policy is reassuring for the equity investors, he said, adding that it could provide the much required support to the banking stocks that have been lagging in the recent equity market rally.
Meanwhile, bourses in Shanghai ended on a positive note while Hong Kong and Tokyo ended in the red.
Stock exchanges in Europe were largely trading higher in early deals.
International oil benchmark Brent crude was trading 0.85 per cent higher at USD 42.97 per barrel. In the forex market, the rupee rose by 8 paise to 73.15 against the US dollar."
LVB receives non-binding offer from Clix
Cash-starved private sector lender Lakshmi Vilas Bank Ltd. (LVB) has received a non-binding offer from Clix Group for merger.
In June 2020, LVB had entered into a non-binding agreement with the Clix Group for amalgamation. On Thursday, LVB said that it had received an indicative non-binding offer from Clix Group indicating that the merger was on.
“Three or four options are before us to decide the best way forward,” said Shakti Sinha, independent director and member, Committee of Directors. “The board will take a final decision about the merger in the next 3-4 days.”
RBI cheers bond market despite keeping rates on hold
Bonds have been enthused by the MPC's announcements despite no rate cut.
Reuters reports: "The Reserve Bank of India assured bond markets on Friday that it stands ready to take whatever measures are necessary to ensure adequate liquidity in the banking system, sparking a sharp rally.
The RBI said it will conduct on-tap long-term repo operations, open market purchases of bonds and special open market operations (S-OMOs), and also provide the increased held-to-maturity limit to banks until March 2022 versus March 2021.
“For the bond market, this is like an early Diwali and just as the March policy (decision) was termed a bazooka, there is enough today to light up some fireworks,” said Arvind Chari, head of fixed income and alternatives at Quantum Advisors, referring to the Hindu festival of lights which falls next month.
The benchmark 10-year bond yield dropped as much as 10 basis points to 5.92% on Friday. The measures were announced alongside a monetary policy committee decision.
The MPC kept rates on hold as predicted while keeping policy stance accommodative to help pull the coronavirus-ravaged economy out of its worst slump in four decades.
Bond markets have been stressed in recent months by the government's record 12 trillion rupee ($164.16 billion) borrowing program and higher borrowing requirements by states.
“In order to impart liquidity to state development loans (SDLs) and thereby facilitate efficient pricing, it has been decided to conduct OMOs in SDLs as a special case during the current financial year,” RBI Governor Shaktikanta Das said, adding these and other measures should ease fears about illiquidity.
Market participants had complained of a lack of clarity on what measures the RBI would take, amid fears the government could further increase borrowing in the last quarter if revenues remained weak.
“We look forward to cooperative solutions for the borrowing programme for the second half of the year. It is said that it takes at least two views to make a market, but these views can be competitive without being combative,” Das said.
Analysts said the measures should help bring down yields across the spectrum in government bonds, state loans and corporate bonds.
“The RBI has never been so explicit in its support to the bond market,” Quantum's Chari said."
RTGS to be available 24x7 from December, says RBI Governor
In a business friendly move, the Reserve Bank of India on Friday said that Real Time Gross Settlement System (RTGS), used for large value transactions, will be made available round-the-clock from December.
In December 2019, the National Electronic Funds Transfer (NEFT) system was made available on a 24x7x365 basis.
Currently, RTGS is available for customers from 7.00 a.m. to 6.00 p.m. on all working days of a week, except second and fourth Saturdays of every month.
RBI Governor Shaktikanta Das said that to support the ongoing efforts aimed at global integration of Indian financial markets, facilitate India’s efforts to develop international financial centres and to provide wider payment flexibility to domestic corporate and institutions, it has been decided to make RTGS available round-the-clock on all days.
Amazon expands network in north east ahead of festive sale
Amazon gets tapping into under-served regions of India.
PTI reports: "E-commerce major Amazon India on Friday announced the expansion of its delivery network in the eight states of North East India ahead of its annual mega festive sale.
With close to 60 Amazon-owned and delivery service partner stations in the region, the company has added several new pin codes to its delivery footprint ahead of the festive season this year, including remote towns such as Champhai, Kolasib, Lumding, Pasighat and Mokokchung, the company said in a statement.
“Amazon has partnered with local entrepreneurs as part of the Delivery Service Partner program, enabling these small businesses with growth opportunities and helping Amazon India to penetrate into tier 3 and tier 4 locations in the North East with its own delivery services,” the e-tailer said.
This expansion is in line with Amazon India’s focus to extend its reach to customers and sellers across every part of the country.
Analysts said both Flipkart and Amazon are deepening their base into rural India to tap the growing popularity of online shopping.
“In line with our vision of making e-commerce a part of everyday life, we have strengthened our delivery network in North East India. With the festive season right around the corner, we look forward to strengthening our presence in the region to reach a wider customer base and creating more work opportunities,” Amazon India director, last mile operations, Prakash Rochlani said.
Last month, the company announced the addition of close to 200 Amazon operated and delivery service partner stations, with a delivery network of 1,700 stations across the country this festive season.
The company has touched more than 28,000 neighbourhoods and kirana in close to 350 cities, it added."
Retail inflation expected to stay close to targeted level by last quarter of FY21: RBI Governor
RBI Governor Shaktikanta Das on Friday said retail inflation is expected to remain close to the targeted level by the last quarter of the current fiscal year. However, it is likely to stay above the tolerance level at 6.8 % for the quarter that ended in September 2020.
Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) has decided to keep the key policy repo rate unchanged at 4% , Mr. Das said while announcing the outcome the central bank’s bi-monthly policy review meeting.
It also decided to continue with the accommodative stance of monetary policy as long as necessary — at least during the current financial year and into the next year — to revive growth on a durable basis and mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward.
The RBI has kept the retail inflation target of 4 % with a bias of plus/minus 2%.
Sensex jumps over 200 points after RBI policy outcome; financial stocks rise
An update on how stocks traded since morning.
PTI reports: "Equity benchmark Sensex jumped over 200 points in the morning session on Friday after the Reserve Bank of India (RBI) monetary policy announcement.
RBI has decided to keep benchmark interest rate unchanged at 4 per cent but retained an accommodative stance, implying more rate cuts in the future if the need arises to support the economy hit by the COVID-19 crisis.
After announcement of the monetary policy review, the 30-share BSE index was trading 235.28 points or 0.59 per cent higher at 40,417.95, and the NSE Nifty rose 57.15 points or 0.48 per cent to 11,891.75.
HDFC was the top gainer in the Sensex pack, rising around 3 per cent, followed by ICICI Bank, L&T, Bajaj Finance, HDFC Bank, Bajaj Finserv, SBI and Axis Bank.
On the other hand, Asian Paints, Tech Mahindra, HUL, Bajaj Auto and TCS were among the laggards.
Rate-sensitive banking and financial stocks were trading on a positive note, with BSE bankex and finance rising up to 1.68 per cent. Realty index was also quoting gains, while auto was in the red.
According to traders, RBI’s decision was on expected lines.
The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, RBI Governor Shaktikanta Das said while announcing the decisions taken by the Monetary Policy Committee (MPC).
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
Das said the Indian economy is entering into a decisive phase in the fight against coronavirus.
He also stated that the contraction in economic growth witnessed in the April-June quarter of the fiscal is “behind us” and that silver linings are visible."
Google Pixel 4a launched at introductory price of ₹29,999
Google on Friday announced its Pixel 4a smartphone will be available in India from October 16 at a special launch price of ₹29,999. The company also announced a special launch price of ₹6,999 for its Nest Audio smart speaker.
Both devices will be available on Flipkart as part of the e-commerce platform’s ‘Big Billion Day’ Sale. While the Pixel 4a, whose MRP is ₹31,999, will continue to be available on Flipkart, Nest Audio (with an MRP of ₹7,999) will also be available soon at retail outlets such as Reliance Retail and Tata Cliq.
The U.S.-headquartered firm recently announced the global launch of Pixel 4a, along with two new 5G-enabled devices — Pixel 4a 5G and Pixel 5. However, the two 5G devices will not be introduced in India.
The Pixel 4a is based on the Qualcomm Snapdragon 730G mobile platform and has Google’s Titan M security module for on-device security. It comes with 6GB of RAM and 128GB of storage and is powered by a 3140 mAh battery that the company claims will last all day.
Words in econ textbooks
RBI keeps benchmark interest rates unchanged, sees GDP contracting by 9.5% in FY2020-21
The monetary policy committee of the Reserve Bank of India has unanimously decided to keep the key lending rates unchanged, Governor Shaktikanta Das said on Friday.
The MPC voted unanimously to leave the policy repo rate unchanged at 4%. The MPC also decided to continue with its accommodative policy stance till as long as required this year and next year, he said.
“After the steep decline into which global economy plunged in second quarter of this year, there’s a rebound in activity in the third quarter but it is not even,” Mr. Das observed.
The Indian economy is entering a decisive phase in the fight against COVID-19. By all indications, the deep contractions of Q1 2020-21 are behind us. Silver linings are among us, Mr. Das said adding that he always “dared to be an optimist.”
The focus must now shift from containment to revival, Mr. Das said.
Rupee rises 15 paise to 73.09 against US dollar in early trade
The RBI's policy decision seemed to boost the rupee against the US dollar.
PTI reports: "The rupee gained 15 paise to 73.09 against the US dollar in early trade on Friday as the Reserve Bank of India decided to keep benchmark interest rate unchanged.
At the interbank forex market, the rupee opened at 73.21 against the American currency, gained some ground to touch 73.09, up 15 paise from its previous close.
On Thursday, the rupee closed at 73.24 against the US dollar.
Maintaining status quo for the second time in a row, Reserve Bank of India (RBI) on Friday decided to keep benchmark interest rate unchanged at 4 per cent but retained an accommodative stance, implying more rate cuts in the future if the need arises to support the economy hit by the COVID-19 crisis.
On the prices front, RBI Governor Shaktikanta Das said inflation is likely to ease to projected target by the fourth quarter of this fiscal.
On the growth front, Das said gross domestic product (GDP) growth may break out of contraction and enter the positive zone by the fourth quarter of the current fiscal.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.15 per cent to 93.46.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 66.97 points higher at 40,249.64, and the broader NSE Nifty rose 24.45 points to 40,249.64.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 978.37 crore on Thursday, according to exchange data.
Brent crude futures, the global oil benchmark, fell 0.16 per cent to USD 43.27 per barrel."
RBI keeps benchmark lending rate unchanged at 4%
Highlights from the RBI Governor's press meet after the monetary policy committee meet:
* RBI to maintain accommodative monetary policy stance to support growth
* Indian economy entering into decisive phase in fight against coronavirus
* Contraction in economic growth of Q1 behind us; silver linings are visible
* Focus must shift from containment to reviving economy
* Inflation likely to ease to projected target by Q4 of FY’21
* Modest recovery in 1st half of year could further strengthen in 2nd half; economic activity to gain traction in Q3
* GDP growth may break out of contraction and enter positive zone by Q4 of current fiscal
* GDP to contract by 9.5 per cent in the current fiscal
* RBI to maintain comfortable liquidity position; Rs 20,000 crore-OMO auction next week
Q2 records 107% surge in fresh investments
Fresh investment proposals surged sharply in the second quarter of this year, rising 107% over the first quarter, with 2,219 new projects entailing an investment of ₹2.19 lakh crore.
Private sector investments also recovered significantly, rising 87% from the previous quarter when an extensive lockdown triggered a 23.9% contraction in the economy.
On a year-on-year basis, fresh investments between July and September were still 11.32% lower, but marked a sharp recovery from investments in the first quarter that were nearly 73% lower.
Among the States, Chhattisgarh received the highest investments in the second quarter followed by Tamil Nadu, which had topped fresh investments in the first quarter, according to Projects Today’s latest report on investment announcements in the July to September quarter. Karnataka was third in the list followed by Gujarat and Maharashtra.
Sensex rises over 100 points ahead of RBI policy outcome
The benchmark indices managed to trade with gains after opening with minor losses.
PTI reports: "Equity benchmark Sensex jumped over 100 points in opening trade on Friday ahead of the Reserve Bank of India’s monetary policy decision.
The 30-share index was trading 103.44 points or 0.26 per cent higher at 40,286.11, and the NSE Nifty rose 34.85 points or 0.29 per cent to 11,869.45.
Tata Steel was the top gainer in the Sensex pack, rising around 3 per cent, followed by Bharti Airtel, L&T, M&M, Bajaj Finance and HDFC.
On the other hand, HUL, Reliance Industries, TCS, Nestle India and Tech Mahindra were among the laggards.
In the previous session, Sensex ended 303.72 points, or 0.76 per cent, higher at 40,182.67, while the broader Nifty climbed 95.75 points, or 0.82 per cent, to finish at 11,834.60.
Exchange data showed that foreign institutional investors bought equities worth Rs 978.37 crore on a net basis on Thursday.
According to Arjun Mahajan, Head - Institutional Business - at Reliance Securities, Indian equities continue to look resilient at the moment ahead of the Reserve Bank’s monetary policy outcome as it would be crucial for the Banking, financial services and insurance (BFSI) sector and markets.
While the Monetary Policy Committee (MPC) may keep policy rates unchanged, market would be keenly watching out commentary of policy documents especially pertaining to MPC stance, GDP and inflation outlook, he noted.
Fading uncertainty about outcome of presidential election in the US along with prospects of the largest fiscal stimulus after election bolstered investors’ confidence and aided Wall Street to close higher, he said.
Bourses in Shanghai, Hong Kong and Seoul were trading on a positive note in mid-session deals, while Tokyo was in the red.
International oil benchmark Brent crude was trading 0.35 per cent lower at USD 43.19 per barrel."
World Bank widens GDP contraction forecast to 9.6%
The World Bank expects India’s economy to contract by 9.6% in 2020-21, revising its earlier estimate in June that output will shrink by just 3.2% amidst the COVID-19 pandemic. This revision reflects ‘the impact of the national lockdown and the income shock experienced by households and firms’, the Bank explained.
In its South Asia Economic Focus report released on Thursday, the Bank reckoned there will be a rebound to 5.4% growth in 2021-22, but largely due to base effects and hinging on assumptions that the pandemic-related restrictions are completely lifted by 2022.
India’s gross domestic product (GDP) contracted 23.9% in the first quarter of this year and official estimates for the second quarter are expected at end-November. The Bank mooted continuation of critical reforms to reverse the sudden and steep impacts of COVID-19.
