RBI Leaves Repo Rate Unchanged

RBI Leaves Repo Rate Unchanged at 6%; cuts GVA Growth Estimate

Governor Urjit Patel-headed six-member monetary policy committee (MPC) on Wednesday kept the short-term lending rate, also known as repo rate, constant at 6 per cent.

The committee left cash reserve ratio (CRR) unchanged at 4 per cent, but cut the statutory liquidity ratio (SLR) requirement by 50 basis points to 19.5 per cent.

The projection of real GVA growth for 2017-18 has revised down to 6.7 per cent from the August 2017 projection of 7.3 per cent, with risks evenly balanced.

Within seconds of the announcement, the benchmark indices pared some gains even as the outcome was much in line with the consensus view.

RBI is beset with an entirely new set of problems now – inflation is raising its ugly head again, the foundation of the economy looks shaken, FIIs are fleeing the country and the rupee is tumbling.

The domestic currency hit a low of 68.86 to the dollar in November 2016 on the government’s surprise note ban, but bounced back to trade in the 64-66 range only to slip again in last one month. The country’s GDP growth slipped to 5.7 per cent in June quarter from 7.3 per cent in September quarter last year.

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RBI Policy LIVE

RBI Policy LIVE: MPC expected to hold rates as inflation, growth concerns loom

  • The Reserve Bank of India’s Monetary Policy Committee is scheduled to announce its fourth bi-monthly policy of the year at 14:30 IST.
  • Bankers and economists expect the central bank to keep rates unchanged but market participants and the government are both hoping for a 25 basis points rate cut.
  • Given the prevalent concerns about a slowdown in the economy, economists expect the RBI to exercise caution and keep rates unchanged.
  • India’s GDP growth slowed down to a three-year low of 5.7 percent at the end of the June quarter and consumer inflation hit a 5-month high of 3.36 percent in August.
  • The RBI has a target of keeping consumer inflation at around 4 percent and given the recent rise in crude prices, which are currently near a 2-year high, the central bank might want to keep a hold on inflation for the time being.
  • The Confederation of Indian Industry (CII) recently called for a 100 basis points cut in interest rates, saying it was the only way to boost the economy.
  • Several other bodies and the government have also made calls for a rate cut to help India out of the slowdown it is currently experiencing.

we bring you live updates and much more on the RBI’s 4th bi-monthly monetary policy announcement.

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Market Live: Sensex, Nifty open Flat

Market Live: Sensex, Nifty open flat as Street awaits cues from RBI MPC meet

Shares of major oil marketing companies (OMCs) opened positively in the opening tick on Wednesday after the government reduced the basic excise duty on petrol and diesel (both branded and unbranded) by Rs 2 a litre with effect from October 4, 2017.

Hindustan Petroleum Corporation (HPCL) jumped 3.42 percent at opening on Wednesday, while Bharat Petroleum Corporation (BPCL) jumped 1.76 percent. Indian Oil Corporation (IOC) also gained 2.26 percent.

Equity benchmark indices opened on a mildly positive note as the Street is seen waiting for the Reserve Bank of India’s MPC meet outcome later in the day.

The Sensex was up 23.25 points at 31520.63, while the Nifty was up 12.45 points at 9871.95. The market breadth was positive as 555 shares advanced against a decline of 186 shares, while 37 shares were unchanged.

Midcaps outperformed the frontline indices, while on the sectoral front, metals took a hit. Positive moves were seen in auto, FMCG and energy stocks.

ITC, Hero MotoCorp, HPCL and IOC were the top gainers, while Bajaj Auto, Tata Motors DVR and Coal India lost the most.

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Indian Rupee Opens Higher at 65.36 per Dollar

The Indian rupee opened higher by 14 paise at 65.36 per dollar on Wednesday versus previous close 65.50.

Pramit Brahmbhatt of Veracity said, “After consolidation, the rupee will trade with a neutral to negative bias. I expect the USD-INR pair to trade in a range of 65.20-65.80.”

Dollar eased in trade as the rally triggered by strong US data fizzled on speculation that US president Donald Trump’s choice for the next Fed chair may be a less hawkish candidate than previously thought.

Investors will also be watching for a raft of economic data culminating in Friday’s US employment report for September.

Dhawal Dalal of Edelweiss AMC said, “Recent price action suggests market participants expect the MPC to maintain a dovish tone. The market will be keen to understand the liquidity stance and MPC’s thoughts on deteriorating CAD and likely increase in the Fiscal Deficit.”

“We are cautiously optimistic on government bonds and expect the 10-year benchmark bond yield to trade between the 6.60-6.70 percent in the near term,” he added.

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Petrol, Diesel Prices Likely to be cut by Rs 5 per litre

Amid a public outcry over rising fuel prices, the government had reduced the basic excise duty on petrol and diesel by 2 rupees per litre, effective today. States have also been asked to review value added tax on petrol and diesel, reports CNBC-TV18. An official said the Centre expect states to reduce VAT on petrol and diesel. It has also asked oil marketing companies to review petrol and diesel prices. States are likely to cut VAT by Rs 2 per litre while OMCs are likely to cut prices by Rs 1 per litre.

There is a need to reduce petrol and diesel prices by Rs 4-5 per litre, the official said. “Rs 65 per litre is an acceptable retail selling price for petrol,” the official added. Government officials indicate that a price cut of Rs 5 per litre on petrol and diesel is likely.

In an interview to CNBC-TV18, AK Sharma, Director – Finance at Indian Oil Corporation (IOC) spoke about the latest developments and happenings in the sector.

We are passing on full benefits to the customers. It is a relief to the public. The government has taken the right call in the interest of public and we are with the government as far as giving the benefit to the customer is concerned, he said.

There is a Rs 2 reduction in the basic price and including VAT the total benefit to the public will be Rs 2.50 per litre in petrol and around Rs 2.25 per litre in diesel in Delhi, he added.

Oil marketing companies (OMCs) are not earning any additional margin. We have been following a transparent mechanism, we work on a very wafer-thin margin, so we hardly have any scope for expanding or shrinking marketing margin, said Sharma.

If state governments reduce the VAT rates, it will also be passed on as and when it happens, he further mentioned.

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CH Stock Market Opening Bell for 04-October-2017

CH: OPENING BELL:

NIFTY FUTURE UP 10 @ 9878

BANK NIFTY FUTURE UP 10 @ 24121

SENSEX UP 24 @ 31522

INR 65.34

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International Market Update by Money CapitalHeight

CH: INTERNATIONAL MARKET UPDATE

GOLD $ 1277.92

SILVER $ 16.75

COPPER $ 2.96

CRUDE $ 50.02

INR 65.34

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World Market Update by Money CapitalHeight

CH: WORLD MARKET UPDATE

HANG SENG 45

NIKKEI 222

SHANGHAI 9.5

DOWJONES 84.07

NASDAQ 15

SGX NIFTY 4

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CH Bank Nifty Market Trend for 04-October-2017

CH: BANK NIFTY TREND -CONSOLIDATE

BANK NIFTY FUTURE LEVELS

SUPP 1: 23750

SUPP 2: 23535

RES 1:24260

RES 2: 24450

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CH Nifty Market Trend for 04-October-2017

CH: GOOD MORNING

NIFTY TREND-CONSOLIDATE

NIFTY SPOT LEVELS

SUPP 1: 9785

SUPP 2: 9710

RES 1: 9895

RES 2: 9970

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