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Reserve Bank of India has hiked the cash reserve ratio of banks by another 25 basis points taking it to 8.25 per cent. The hike in CRR comes into effect from the fortnight beginning May 24.

The central bank has kept the repo rate and reverse repo rate unchanged at 7.75 per cent and 6 per cent, respectively. It has also held the Bank Rate steady at 6.0 per cent.

In the Annual Policy Statement for 2008-09, Governor YV Reddy has given high priority to price stability, anchoring inflation expectations and orderly conditions in financial markets.

RBI aims to bring down inflation to around 5.5 per cent in 2008-09, bringing it close to 5.0 per cent as soon as possible. Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5 per cent, so that an inflation rate of around 3.0 per cent becomes a medium-term objective.

The central bank has projected GDP growth for 2008-09 in the range of 8.0- 8.5 per cent.

Meanwhile, investors cheered the credit policy decision and India’s benchmark Sensex ended 352 pts in the green, almost 2.1 % up, ending at 17,368.28. National Stock Exchange’s Nifty surged 2.05 per cent or 104 points to close at 5193.90.

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• Govt curbs steel exports; levies up to 15 pc export duty
• RBI hikes CRR by 25 bps more; other rates unchanged
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• Techs lead as Sensex adds over 350 pts: Banking, auto, realty stocks cheer RBI’s credit policy

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Action in frontline shares on Indian bourses was muted on Monday morning after last week’s rally, but the mid-and small-cap stocks were buoyant. Consumer durables and real estate shares advanced, while capital goods, power and oil majors proved a drag.

Global cues were mostly positive, but domestic concerns like inflation and speculation about a 25 bps rate hike by the RBI on Tuesday weighed on sentiment.

Apart from Dr YV Reddy announcing follow up measures on April 29, the US Fed, probably will be announcing a pause in the rate-cutting spree on the 30th, but not before cutting down the rates by another 0.25 per cent. The first reading of the US Q1 GDP will also come on the same day and all eyes will then be on the April employment numbers that will come on Friday.

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• Oil strikes new record near $120 on supply fears
• Mittal richest in Europe, Ambanis world’s richest together

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• Inflation would see dip over July-Aug: Scindia
• China’s economy to slow down by over 1 per cent in 2008

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• Oil prices to double by 2012: Canadian study
• Bharti results help Sensex regain 17K level, mkt optimistic again
• Surplus cash may prompt RBI to hike key rates
• ICICI Bank to review lending rates on cues from RBI
• Essar Oil posts Rs 8.48-crore loss in Q4 FY 08
• ICICI Bank Q4 net up 39 pc, beats forecast
• Yahoo stays silent as Microsoft deadline nears

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India’s annual inflation rate remained at three-year highs above 7 per cent in mid-April, data showed on Friday, leaving the Reserve Bank of India with a dilemma over how to act at a review next week amid signs of slowing growth.

The price rise is expected to prompt Reserve Bank of India (RBI) to further tighten money supply in its annual credit policy slated to be announced on April 29. Continue Reading »

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World oil prices, which had threatened to break the symbolic $120 a barrel level, fell further on Friday after a strengthening US dollar and rising US crude stockpiles prompted traders to lock in profits.

New York’s main oil futures contract, light sweet crude for delivery in June, slid 46 cents to $115.60 per barrel. The benchmark contract closed down $2.24 at $116.06 a barrel during floor trading at the New York Mercantile Exchange on Thursday.

In the foreign exchange market yesterday, the dollar gained in value against the euro amid speculation the US Federal Reserve soon might end its campaign of cutting interest rates. A stronger US currency makes dollar-priced crude more expensive for foreign buyers, tending to discourage demand.

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When will crude stabilize?

International concern mounted as world oil prices edged closer to $120 a barrel. Analysts said a weakening US dollar, supply worries in Nigeria and the OPEC cartel’s reluctance to increase output have all contributed to the price surge. A weakening US dollar has spurred oil demand because dollar-priced oil becomes cheaper for buyers holding stronger foreign currencies.

Saudi Arabia is the biggest producer in the Organisation of the Petroleum Exporting Countries (OPEC), which on Tuesday said that it plans to increase its production capacity by five million barrels per day (bpd) by 2012. OPEC’s secretary general Abdalla Salem El-Badri said OPEC aimed to boost production capacity by nine million bpd by 2020. Current OPEC output stands at about 32 million bpd.

Many analysts expect the Federal Reserve to cut interest rates further this year to try to shore up the ailing U.S. economy, a move that would likely further weaken the dollar.

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• Oil hits new record above $118 a barrel
• FIIs sell shares worth Rs 49.89 cr on bourses
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• Accenture to up India headcount to 50,000 in a year
• Ranbaxy net up 7.21% at Rs 153 cr
• Biocon Q4 net up 8% at Rs 65 cr

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