Veggie prices may be falling sharply: Rajan
19 Dec 2013 12:29 AM GMT
Wholesale inflation in vegetables segment was at 95.25 per cent in November, while the rate of price rise at retail level was 61.60 per cent.
‘There are indications that vegetable prices may be turning down sharply, although trading mark-ups could impede the full pass-through into retail inflation. Certainly sampling of metros suggests vegetable inflation is coming down quite sharply.
Our view is there might be a spike, RBI governor Raghuram Rajan said. He was talking to reporters after unveiling the mid-quarter monetary policy review in which the Reserve Bank of India maintained a surprise status quo in key policy rates.
‘Current inflation is too high. However, given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy... there is merit in waiting for more data to reduce uncertainty,’ Rajan said. While retail inflation soared to a nine-month high of 11.24 per cent in November, the index based on wholesale prices zoomed to a 14-month high of 7.52 per cent last month. Rajan added that the RBI is content with the reduction in volatility of the rupee.
‘We are happy with the reduction in volatility and that was our aim right through. We also wanted to reduce the unhinged expectations on the rupee. There was a point where analysts were competing with each other to see how weak they could proclaim the rupee to be at the end of the year...we hope that that unhinging of expectations have come down,’ the RBI Governor told reporters.
‘Cannot lift import curbs to lower CAD right now’
Mumbai: The Reserve Bank of India (RBI) on Wednesday said that it is not the right time to take back measures it adopted to control rising current account deficit (CAD) but favoured removing curbs on gold imports.
‘At this point, it will be premature to withdraw these restrictions for a variety of reasons,’ RBI governor Raghuram Rajan told analysts on a conference call after announcing the mid quarter review of the monetary policy. The RBI measures, the prime driver to narrow the current account deficit to 1.8 per cent in the second quarter, will be withdrawn once the the deficit stabilises on its own, beyond the imposed gold restrictions, he said.
‘Once we feel more comfortable with the current account deficit, once we have a sense that tapering, at least the threat of it, is behind us, we will certainly consider unwinding these distortionary actions,’ Rajan said.
‘I would be much happier if we had the kind of CAD we have without significant curbs on anything, including gold. We should aim to have a CAD without any distortions, removing the incentives for smuggling, that is what we will be working for,’ he said. CAD, which is the difference between the inflow and outflow of foreign currency, came down to 1.2 per cent in the September quarter, from 4.9 per cent in April-June period. In the first half of this year, CAD stood at $26.9 billion (3.1 per cent of GDP), down from $37.9 billion (4.5 per cent of GDP) in the first six months of 2012-13.
The government and the RBI expect to contain CAD at $56 billion in 2013-14. In the previous fiscal, it had touched a record high of 4.8 per cent. Ever since the release of official data pointing out to a reduction in CAD, there has been speculation that RBI and the Finance Ministry may withdraw the extraordinary steps, saying they were leading to smuggling of the precious metal.
Markets cheer surprise status quo RBI policy; Sensex up 248
Mumbai: The benchmark Sensex gained for the first time in seven days, rising 248 points on Wednesday after the Reserve Bank of India unexpectedly decided to keep key policy rates unchanged.
Realty, capital goods, oil & gas and power shares led all 12 BSE sectoral indices higher. Heavyweight Reliance Industries, along with HDFC Bank and State Bank of India, helped to lift the Sensex as all but three of the 30 index stocks advanced.
Bhel and Tata Power topped the gainers on the index. Auto stocks Bajaj Auto and Hero Motocorp also moved up. The S&P Sensex opened lower and surged to the day's high of 20,917.57 after the RBI's Mid-Quarter Monetary Policy Review. It ended at 20,859.86, a rise of 247.72 points or 1.2 per cent.
The Reserve Bank of India kept the short-term lending rate unchanged 7.75 per cent, against expectations of a 25 bps increase. The cash reserve ratio was maintained at 4 per cent.
‘The RBI unexpectedly kept the policy rate on hold in light of the weak growth backdrop and as it expects inflation to ease, partly as a result of food supplies normalising,’ Leif Lybecker Eskesen, Chief Economist for India & ASEAN at HSBC, said in a note.
‘However, it also signalled that if that was not to materialise, it stands ready to tighten further to stabilise inflation expectations. It may well come to that.’
In the previous six sessions, the Sensex had plunged by over 714 points, or 3.35 per cent, from its peak close of 21,326.42 on 9 December. The CNX Nifty on the National Stock Exchange flared up by 78.10 points, or 1.27 per cent, to end at 6,217.15. The SX40 on the MCX Stock Exchange closed up 135 points at 12,399.59.
Trent gained 10.74 per cent after UK retailer Tesco said it had applied to buy a 50 per cent stake in Trent Hypermarket Ltd and open supermarkets in India.
Biotechnology major Biocon, which signed a pact with Quark Pharmaceuticals to develop an ophthalmic drug, advanced 11.38 per cent. India Inc welcomed the central bank's decision, saying an interest rate hike is not the solution to tackle inflation. RBI governor Raghuram Rajan said continuing weakness in growth was the main driver of his policy action.
‘RBI's move deviated from its conventional practice to support growth,’ said Jignesh Chaudhary, Head of Research at Veracity Broking Services. ‘Markets are now keenly watching Fed monetary statement due later on Wednesday night.’
Key indices in Japan moved up on higher exports and a fall in the yen against the dollar. Other Asian stock indices were mixed ahead of the Federal Reserve's decision on its stimulus programme. European stock markets traded higher.
In the domestic market, the Sensex gainers were led by Bhel (5.7 per cent), Tata Power (4.04 per cent), Bajaj Auto (3.87 per cent), Hero MotoCorp (3.14 per cent) and Larsen & Toubro (2.83 per cent). Other shares moving up included State Bank of India (2.67 per cent), HDFC (2.59 per cent), Reliance Industries (2.35 per cent), ONGC (2.29 per cent) and Gail India (2.29 per cent).
Foreign institutional investors bought shares worth a net Rs 249.93 crore on Tuesday, according to provisional data from the stock exchanges.
Rupee slides by 8p to 62.09 per $
Mumbai: Shrugging off smart recovery in local equities, the Indian rupee surrendered initial gains and depreciated further by eight paise to close at 62.09 against the Greenback on expectations that the US Federal Reserve may taper its stimulus programme in a two-day policy meet ending late Wednesday.
Continued dollar demand from importers amid better dollar overseas too put pressure on the rupee while sustained capital inflows restricted the fall. The rupee commenced strong at 61.90 a dollar from last close of 62.01 at the Forex market and improved further to a high of 61.77 on smart rebound in domestic stocks after the central bank kept its all key policy rates unchanged in its mid-quarter monetary policy meeting, despite rise in both inflations.
‘There are indications that vegetable prices may be turning down sharply, although trading mark-ups could impede the full pass-through into retail inflation. Certainly sampling of metros suggests vegetable inflation is coming down quite sharply.
Our view is there might be a spike, RBI governor Raghuram Rajan said. He was talking to reporters after unveiling the mid-quarter monetary policy review in which the Reserve Bank of India maintained a surprise status quo in key policy rates.
‘Current inflation is too high. However, given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy... there is merit in waiting for more data to reduce uncertainty,’ Rajan said. While retail inflation soared to a nine-month high of 11.24 per cent in November, the index based on wholesale prices zoomed to a 14-month high of 7.52 per cent last month. Rajan added that the RBI is content with the reduction in volatility of the rupee.
‘We are happy with the reduction in volatility and that was our aim right through. We also wanted to reduce the unhinged expectations on the rupee. There was a point where analysts were competing with each other to see how weak they could proclaim the rupee to be at the end of the year...we hope that that unhinging of expectations have come down,’ the RBI Governor told reporters.
‘Cannot lift import curbs to lower CAD right now’
Mumbai: The Reserve Bank of India (RBI) on Wednesday said that it is not the right time to take back measures it adopted to control rising current account deficit (CAD) but favoured removing curbs on gold imports.
‘At this point, it will be premature to withdraw these restrictions for a variety of reasons,’ RBI governor Raghuram Rajan told analysts on a conference call after announcing the mid quarter review of the monetary policy. The RBI measures, the prime driver to narrow the current account deficit to 1.8 per cent in the second quarter, will be withdrawn once the the deficit stabilises on its own, beyond the imposed gold restrictions, he said.
‘Once we feel more comfortable with the current account deficit, once we have a sense that tapering, at least the threat of it, is behind us, we will certainly consider unwinding these distortionary actions,’ Rajan said.
‘I would be much happier if we had the kind of CAD we have without significant curbs on anything, including gold. We should aim to have a CAD without any distortions, removing the incentives for smuggling, that is what we will be working for,’ he said. CAD, which is the difference between the inflow and outflow of foreign currency, came down to 1.2 per cent in the September quarter, from 4.9 per cent in April-June period. In the first half of this year, CAD stood at $26.9 billion (3.1 per cent of GDP), down from $37.9 billion (4.5 per cent of GDP) in the first six months of 2012-13.
The government and the RBI expect to contain CAD at $56 billion in 2013-14. In the previous fiscal, it had touched a record high of 4.8 per cent. Ever since the release of official data pointing out to a reduction in CAD, there has been speculation that RBI and the Finance Ministry may withdraw the extraordinary steps, saying they were leading to smuggling of the precious metal.
Markets cheer surprise status quo RBI policy; Sensex up 248
Mumbai: The benchmark Sensex gained for the first time in seven days, rising 248 points on Wednesday after the Reserve Bank of India unexpectedly decided to keep key policy rates unchanged.
Realty, capital goods, oil & gas and power shares led all 12 BSE sectoral indices higher. Heavyweight Reliance Industries, along with HDFC Bank and State Bank of India, helped to lift the Sensex as all but three of the 30 index stocks advanced.
Bhel and Tata Power topped the gainers on the index. Auto stocks Bajaj Auto and Hero Motocorp also moved up. The S&P Sensex opened lower and surged to the day's high of 20,917.57 after the RBI's Mid-Quarter Monetary Policy Review. It ended at 20,859.86, a rise of 247.72 points or 1.2 per cent.
The Reserve Bank of India kept the short-term lending rate unchanged 7.75 per cent, against expectations of a 25 bps increase. The cash reserve ratio was maintained at 4 per cent.
‘The RBI unexpectedly kept the policy rate on hold in light of the weak growth backdrop and as it expects inflation to ease, partly as a result of food supplies normalising,’ Leif Lybecker Eskesen, Chief Economist for India & ASEAN at HSBC, said in a note.
‘However, it also signalled that if that was not to materialise, it stands ready to tighten further to stabilise inflation expectations. It may well come to that.’
In the previous six sessions, the Sensex had plunged by over 714 points, or 3.35 per cent, from its peak close of 21,326.42 on 9 December. The CNX Nifty on the National Stock Exchange flared up by 78.10 points, or 1.27 per cent, to end at 6,217.15. The SX40 on the MCX Stock Exchange closed up 135 points at 12,399.59.
Trent gained 10.74 per cent after UK retailer Tesco said it had applied to buy a 50 per cent stake in Trent Hypermarket Ltd and open supermarkets in India.
Biotechnology major Biocon, which signed a pact with Quark Pharmaceuticals to develop an ophthalmic drug, advanced 11.38 per cent. India Inc welcomed the central bank's decision, saying an interest rate hike is not the solution to tackle inflation. RBI governor Raghuram Rajan said continuing weakness in growth was the main driver of his policy action.
‘RBI's move deviated from its conventional practice to support growth,’ said Jignesh Chaudhary, Head of Research at Veracity Broking Services. ‘Markets are now keenly watching Fed monetary statement due later on Wednesday night.’
Key indices in Japan moved up on higher exports and a fall in the yen against the dollar. Other Asian stock indices were mixed ahead of the Federal Reserve's decision on its stimulus programme. European stock markets traded higher.
In the domestic market, the Sensex gainers were led by Bhel (5.7 per cent), Tata Power (4.04 per cent), Bajaj Auto (3.87 per cent), Hero MotoCorp (3.14 per cent) and Larsen & Toubro (2.83 per cent). Other shares moving up included State Bank of India (2.67 per cent), HDFC (2.59 per cent), Reliance Industries (2.35 per cent), ONGC (2.29 per cent) and Gail India (2.29 per cent).
Foreign institutional investors bought shares worth a net Rs 249.93 crore on Tuesday, according to provisional data from the stock exchanges.
Rupee slides by 8p to 62.09 per $
Mumbai: Shrugging off smart recovery in local equities, the Indian rupee surrendered initial gains and depreciated further by eight paise to close at 62.09 against the Greenback on expectations that the US Federal Reserve may taper its stimulus programme in a two-day policy meet ending late Wednesday.
Continued dollar demand from importers amid better dollar overseas too put pressure on the rupee while sustained capital inflows restricted the fall. The rupee commenced strong at 61.90 a dollar from last close of 62.01 at the Forex market and improved further to a high of 61.77 on smart rebound in domestic stocks after the central bank kept its all key policy rates unchanged in its mid-quarter monetary policy meeting, despite rise in both inflations.
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