Bizcues.com

Inflation, which is hovering over 7 per cent at present, is expected to fall to six per cent in the next four to six weeks, a survey said. Assocham Business Barometer survey of 240 CEOs and CFOs across various sectors revealed the industry outlook on prices is optimistic as majority believed that inflation would subside and slip to six per cent in the next four to six weeks. 

Continue Reading»

No comments »

When will the worm die down?

India’s wholesale price index rose 7.61 per cent in the 12 months to April 26, marginally higher than previous week’s annual rise of 7.57 per cent, government data showed on Friday. The rate matched a median forecast of 7.61 per cent in a poll of analysts.

It was the highest since an annual reading of 7.68 per cent on Nov. 13, 2004. The annual inflation rate was 6.01 per cent during the corresponding week of the previous year.

No comments »

Indian inflation jumped to a fresh 42- month high in mid-April, and analysts said it is unlikely to ease soon as price pressures persist and fiscal and monetary steps will take time to have an impact.

Data released by the government on Friday showed the wholesale price index rose 7.57 percent in the 12 months to April 19, above the previous week’s 7.33 percent and outstripping market expectations of an annual rise of 7.38 percent. Wholesale inflation now stands at its highest since Nov. 13, 2004, when it was 7.68 percent. The latest rise was largely driven by higher prices of foods, metal products, and industrial fuels.

The government and central bank have rolled out a string of policy changes in recent weeks as inflation has soared. In the latest move, the Reserve Bank of India on Tuesday raised the cash reserve ratio (CRR) by 25 basis points to 8.25 percent, its highest level in seven years, and said it was ready to act again if price pressures continued to build. Deposit rates are expected to be revised downwards to absorb cost of the hike in cash reserve ratio (CRR), bankers said on Thursday. With credit growth slowing down, they said lending rates will not be raised in the short term. Finance minister P Chidambaram said on Thursday he does not expect interest rates to go up following RBI move to hike mandatory deposits of banks by 0.25% to 8.25%.

Economists expect the central bank to focus on draining inflation-fuelling cash from the system, while the government moves to fix supply-side problems. The Congress Party-led coalition, under pressure from its allies, also unveiled new measures on Tuesday to tame inflation and guard food supplies, slapping export taxes on basmati rice and some steel products. Fighting inflation has become a top priority for the government as it heads towards a general election due by May 2009 and a series of key state polls this year.

Meanwhile, Finance Minister P Chidambaram on Friday said inflation will be tamed and food prices will come down sooner than other prices.

Policy planners the world over are grappling with soaring food and raw material prices. But India, which has about 260 million poor, is especially sensitive to rising prices as food accounts for a much higher proportion of people’s expenditure than in developed economies.

No comments »

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.

No comments »

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.

No comments »

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»

No comments »

Country’s largest private sector lender ICICI Bank jacked up auto loans by up to 0.75 per cent even before the RBI decided to increase statutory deposits last week as a part of inflation controlling measure. ICICI Bank could further revise rates depending on the market condition and competition.

Auto loan prior to the hike was in the range of 13.5-14 per cent, which have gone up by 0.75 per cent during the month.

Last week, the Reserve Bank (RBI) hiked Cash Reserve Ratio, the amount of depositors’ money that banks need to park with it, by half a per cent to tighten money supply. The hike, which would take CRR to 8 per cent, will impound Rs 18,500 crore from the banking system leading to reduction in the margins of the banks.

No comments »

The RBI move perhaps has changed the financial landscape quite significantly. All markets will react on Monday, but there is considerable surprise at what the RBI has done, in changing the CRR and the repo rate.

It is very bad news for markets. It is almost certain that stock markets and bond markets will both sell off on Monday morning. Being led by the rate sensitive sectors, Markets are in for a blood bath on Monday morning because this has come as a surprise, particularly because the markets were expecting that rates might actually start cooling down in the end of April as inflation cools down but the RBI has not even waited for its monetary policy meeting.

Continue Reading»

No comments »

The RBI hiked Cash Reserve Ratio, the amount of depositors’ money that banks need to park with it, by half a per cent to tighten money supply as part of concerted efforts with the government to ease inflation. The CRR would be hiked by 0.25 per cent from April 26 (taking CRR to 8%) and by an identical percentage from May 10.

Continue Reading»

No comments »

Inflation eased off a bit and was seen at 7.19 pc on April 5 compared to the previous week’s 7.41 per cent. Inflation figures for a particular week are generally announced on Fridays, but Friday being a public holiday, the figure was announced earlier this week.

Continue Reading»

No comments »