Live RBI Policy Review: Sensex ends below 800 pts, Nifty down 283 pts; Rupee roars at 74-mark post RBI policy
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BSE Sensex ended at Rs 34,376.99 per piece low by 792.17 points or 2.25% whereas Nifty 50 ends at Rs 10,316.45 per piece low by 282.80 points or 2.67%.
BSE Sensex plunged over 900 points after RBI announced it was sticking with the current repo rate of 6.50%, refusing to go with what was expected - a rate hike by 25 bps was on the cards. However, Governor Urjit Patel led RBI chose to stick with the status quo. Sensex fell as much as 905 points to 34,263 even as Nifty dropped under the 10,300 level.
Top gainers on BSE were only companies. IT-giant Infosys was took lead in gainers list by ending at Rs 721.85 per piece high by Rs 15.50 or 2.19%. Followed by another IT-major TCS at Rs 2103.10 per piece high by Rs 38.85 or 1.88%. Meanwhile, Indusind bank was also in the list ending at Rs 1609.90 up by Rs 21.60 or 1.36%, however, HDFC Bank finished subdued at Rs 1962.85.
Whereas, the losers list involved a long line of companies, with ONGC taking the tag of top loser ending at Rs 146.95 low by Rs 27.85 or 15.93%, Reliance industries at Rs 1049.85 low by Rs 70.70 or 6.31%, followed by Adani ports at Rs 299 low by Rs 16.95 or 5.36%, State bank at 257.80 low by Rs 12.80 or 4.73%, Bharti Airtel at 296.75 low by Rs 13.25 or 4.27%, Maruti suzuki at Rs 6893 low by Rs 300.65 or 4.18%.
The Reserve Bank of India today surprised experts and markets, by keeping repo rate unchanged at 6.50%. Consequently, the reverse repo rate under the LAF remains at 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%.
The decision of the MPC is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth. The main considerations underlying the decision are set out in the statement below.
In the third bi-monthly resolution of August 2018, CPI inflation was projected at 4.6% in Q2:2018-19, 4.8% in H2 and 5.0% in Q1:2019-20, with risks evenly balanced. Excluding the HRA impact, CPI inflation was projected at 4.4% in Q2:2018-19, 4.7-4.8% in H2 and 5.0% in Q1:2019-20. Actual inflation outcomes, especially in August, were below projections as the expected seasonal increase in food prices did not materialise and inflation excluding food and fuel moderated.
Going forward, the inflation outlook is expected to be influenced by several factors, as per RBI.
First, food inflation has remained unusually benign, which imparts a downward bias to its trajectory in the second half of the year. Inflation in key food items such as pulses, edible oils, sugar, fruits and vegetables remains exceptionally soft at this juncture. The risk to food inflation from spatially and temporally uneven rainfall is also mitigated, as confirmed by the first advance estimates that have placed production of major kharif crops for 2018-19 higher than last year’s record. An estimate of the impact of an increase in minimum support prices (MSPs) announced in July has been factored in the baseline projections.
Secondly, the price of the Indian basket of crude oil has increased sharply, by US$ 13 a barrel, since the last resolution.
Thirdly, international financial markets remained volatile with EME currencies depreciating significantly. Finally, the HRA effect came off its peak in June and is dissipating gradually on expected lines.
Taking all these factors into consideration, inflation is projected at 4.0% in Q2:2018-19, 3.9-4.5% in H2 and 4.8% in Q1:2019-20, with risks somewhat to the upside (Chart 1). Excluding the HRA impact, CPI inflation is projected at 3.7% in Q2:2018-19, 3.8 - 4.5% in H2 and 4.8% in Q1:2019-20.
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BSE Sensex plunged over 900 points after RBI announced it was sticking with the current repo rate of 6.50%, refusing to go with what was expected - a rate hike by 25 bps was on the cards. However, Governor Urjit Patel led RBI chose to stick with the status quo. Sensex fell as much as 905 points to 34,263 even as Nifty dropped under the 10,300 level.
The Nifty was trading at 10,269, down by 329 points.
Governor Patel has pulled off yet another surprise by sticking with the status quo today at the bi-monthly monetary policy review. According to the explanations provided, this decision of the Monetary Policy Committee (MPC) was based on on expectations of softening price rise. However, Patel has announced a change in RBI policy stance to "calibrated tightening", which was at "neutral" earlier. The resolution that was released stated, "The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis."
Taking into account the baseline assumptions, monetary policy tightening of 50 bps during June - August 2018, RBI's survey indicators and model forecasts reveal that real GDP growth is projected to improve from 6.7% in 2017-18 to 7.4% in 2018-19. As per RBI, 8.2% in Q1, followed by 7.4% in Q2, 7.3% in Q3 and 7.1% in Q4 – with risks broadly balanced
According to RBI, the April 2018 MPR had projected an acceleration in real gross domestic product (GDP) growth in 2018-19 on the back of: (a) the goods and services tax (GST) stabilising; (b) improving credit offtake; (c) likely boost to investment from primary market resource mobilisation; (d) the process of recapitalisation of public sector banks and resolution of distressed assets under the Insolvency and Bankruptcy Code (IBC); (e) buoyant global trade; and (f) the thrust to the rural and infrastructure sectors in the Union Budget 2018- 19.
BSE Sensex plunged over 600 points after RBI announced it was sticking with the current repo rate of 6.50%, refusing to go with what was expected - a rate hike by 25 bps was on the cards. However, Governor Urjit Patel led RBI chose to stick with the status quo. Sensex fell as much as 605 points to 34561.52 even as Nifty dropped under the 10,400 level.
The Nifty was trading at 10,457, down by 142.05 points around 3 pm. Sensex was trading at 34,630, down by 538.71 points.
Rupee goes green trading at Rs 73.980 per piece high by 0.195 points which means 0.26%, Whereas Sensex & Nifty turns Red.
BSE sensex trading at Rs 34,783.11 low by 386.05 points which is 1.10% at around 1452 hrs where as, Nifty trading at Rs 10,438.95 low by 160.30 points which is 1.51%
The RBI Governor Urjit Patel-led monetary policy committee (MPC) on Friday maintained status quo setting aside all the speculation of the repo rate hike. It was expected that the RBI will hike the repo rate to combat inflationary pressures as it grapples with a weakening rupee, surging oil prices and market instability sparked by a major non-bank finance firm`s defaults.
A rate hike would have made domestic yields on debt more attractive for foreign investors and contain inflationary pressures from high crude prices as India imports more than two-thirds of its oil needs.
As usual, the Dalal Street continued for another bloodbath, as the benchmark Sensex and Nifty indexes traded on negative today ahead of RBI's bi-monthly monetary policy. Interestingly, it was the oil and gas sector which turned to be top losers, so much so, that few its major stocks even touched an all-time low, among which was largest oil distributor ONGC. The company has cracked a low of Rs 149.10 per piece resulting in overall decline of 15% on BSE. However, at around 1158 hours, the ONGC share price was trading at Rs 151.55 per piece low by Rs 23.25 which is 13.30%.
Reason can be attributed to a clarification sought by stock exchanges in regards to a media report saying, 'Government signs OALP-1 contracts with Vedanta, ONGC'. The reply is awaited from ONGC.
RBI governor Urjit Patel along with Monetary Policy Committee (MPC) will be announcing India's fourth bi-monthly monetary policy for fiscal year FY19. The MPC will provide policy stance, repo rate, CPI inflation outlook and its view on global economy and markets. The MPC members have been meeting for the last two days, and today they will be presenting their decision at around 14:30 hours. Majority of experts believe that once again RBI will hike policy repo rate, which is currently at 6.50%. The last time this policy repo rate was seen in April 2016 policy.
Vivek Ranjan Misra and Jayasree Ram, analysts at Karvy Stock Broking, said, "If the Reserve Bank wants to maintain a constant real policy (nominal –CPI) rate, it would need to deliver 2 to 3 rate hikes of 25 bps each. We expect another rate hike of 25 bps on 5th October, 2018 while not ruling out even a 50 bps increase.”
If RBI does hike rate in today's policy, this can turn out to be a negative factor for your EMIs on home, personal and vehicle loans.
Each lending and deposit rate decided by any bank has a direct relationship with policy repo rate. When banks borrow funds from the central bank during shortages, they end up paying a higher interest rate.
If there is a need of funds, then banks will begin by passing their repo rate burden on you by raising lending rates.
The Monetary Policy Committee (MPC) will meet today, for the Fourth Bi-monthly Monetary Policy Statement for 2018-19. The resolution of the MPC will be placed on the website at 2.30 pm today.
Ahead of RBI policy benchmark indexes sensex nifty trading negatively, However These 20 shares will help you earn more today, October 05th, 2018
Majority of experts believe that once again RBI will hike policy repo rate, which is currently at 6.50%. The last time this policy repo rate was seen in April 2016 policy.
Bank of Baroda says, “While yields fell because of reduction in government borrowing (Rs 200bn below est.) in H2 and OMOs of Rs 360bn for Oct’18, the macro backdrop suggests yields are likely to move higher than lower. With INR falling by 5.6% and oil up by 14% since last policy, we expect RBI to hike rate by 25bps on 5 Oct 2018.”
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The MPC members have been meeting for the last two days, and today they will be presenting their decision at around 14:30 hours. Ahead of the policy, the Sensex has cracked below 35,000-mark, and was trading 34,980.85 down by 188.31 points or 0.54%. The benchmark has plunged by as much as 256 points in few minutes of opening. Meanwhile, the Nifty 50 was trading at 10,492.50 lower by 106.75 points or 1.01%.
Majority of experts believe that once again RBI will hike policy repo rate, which is currently at 6.50%. The last time this policy repo rate was seen in April 2016 policy.
A poll carried out by Zee Business reveals, that about 70% experts are hoping for a rate hike in today policy, while remaining 30% believe Patel may decide to keep a status quo.
Today the top management of the Reserve Bank of India will interact with the media in Mumbai after the announcement of the Resolution of the Monetary Policy Committee of the Reserve Bank of India under the Fourth Bi-monthly Monetary Policy Statement for 2018-19
The interaction will be held from 2.45 pm to 3.05 pm. The media conference will also be live webcast on www.rbi.org.in. Media outside Mumbai can join the media interaction through teleconference.
The Monetary Policy Committee of the Reserve Bank of India will announce its resolution under the Fourth Bi-monthly Monetary Policy Statement for 2018-19 on Friday, October 05, 2018. The Reserve Bank of India will also release the Monetary Policy Report – October 2018 along with the Fourth Bi –monthly Monetary Policy Statement for the year 2018-19.
The documents will be available on the RBI website at 2.30 pm today.
S&P BSE Sensex trading at 35,009.26 diving low by 159.90 points which is 0.45% whereas Nifty 50 performing at 10,505.95 low by 93.30 points which is 0.88%
Currently top gainers on Nifty 50 are Indiabulls Housing Finance Limited running at 984.40 per piece high by 34.15 points which is 3.59%, followed by Titan running at 802 per piece high by 25.30 points which is 3.26%, Eicher Motors Limited at 22.450 per piece high by 542.15 points which is 2.47%, Sun Pharmaceutical Industries Limited at 611 per piece high by 11.95 points which is 1.99%, Bharti Infratel Limited running at 261.05 per piece high by 4.90 points which is 1.91%
Whereas the top loosers on Nifty 50 are Hindustan Petroleum Corporation Limited at 173.75 per piece low by 43.40 points which is 19.99% followed by Bharat Petroleum Corporation Limited at 269.15 per piece low by 62 points which is 18.72%, Indian Oil Corporation Limited at 120.55 per piece low by 19.75 points which is 14.08%, GAIL (India) Limited at 330.05 per piece low by 37.90 points which is 10.30%, Oil & Natural Gas Corporation Limited at 155 per piece low by 17.40 points which is 10.09% at around 1005 hrs.
Rupee performs negatively at 73.525 low by 0.260 points which is 0.35 per cent at arount 0940 hrs.
According to Anindya Banerjee, Research Analysts at Kotak Securities said, "Today traders have the RBI meeting to consider. RBI is expected to raise repo by 25 bps and maintain a hawkish tone. RBI may announce more OMOs to meet demand for liquidity during the festive season. There could be some profit booking correction in USDINR pre and post announcement of rate hikes. However, short of any unexpected announcements, impact of RBI monetary policy remains limited. Apart from RBI, the next major event or data to watch will the US jobs data, where focus will be on wage growth. Wages may rise 0.4% once again in September, like in August, with headline job growth well over 200K. A robust data can be supportive for USD and negative for UST and EMFX. Nevertheless, a disappointment in headline job growth followed by subdued wage growth can trigger a sharp sell-off in USD against DMFX as well as EMFX."
TECHNICAL VIEW & RUPEE CROSSES, as per Banerjee.
USDINR is expected to open higher around 73.70/75 on spot. Technically, USDINR remains in an uptrend. If the pair manages to sustain above 72.90 on spot, above the last few weeks range of 71.50-72.90, then it can aim for 74.00/74.50 on spot. Nevertheless, if the pair fails to sustain above 72.90, then we can expect the old range of 72.00 and 73.00 to come into play. Primary uptrend is intact as long as prices are holding above 71.75 levels on spot. On crosses, buy on dips in EURINR with stop below 83.80 & on GBPINR with stop below 94.00 on spot. JPYINR is still within a consolidation phase between 63.00 & 65.50 on spot.
Majority of them still believe a rate hike is on table in today’s monetary policy. A poll carried out by Zee Business revealed that 70% expect a rate hike of 25 basis point, while 30% favor a status quo and 0% hoping for 50 basis points hike.
Thereby, rate hike weighs heavy in experts opinions, however, one needs to put a question - is there any way or any reason that RBI may actually opt for a status quo.
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