The Reserve Bank of India (RBI) raised the key policy repo rate by 50 basis points.
“With inflation expected to remain above the upper tolerance threshold in Q2 and Q3 of the current financial year, the MPC stressed that sustained high inflation could de-stabilise inflation expectations and harm growth in the medium term,” RBI Governor Shaktikanta Das said.
India’s annual consumer inflation remained above the 7% mark in June and beyond the RBI’s upper tolerance limit of 6% for the sixth month in a row.
The NSE Nifty 50 index rose 0.32% to 17,436.95 by 0454 GMT, and the S&P BSE Sensex advanced 0.36% to 58,509.13, after the policy decision.
India’s 10-year benchmark bond yield rose to 7.2317% after the policy decision, while the rupee was trading at 79.03 per dollar.
!1 New UpdateClick here for latest updates
Wall Street opens lower as strong jobs data fuels rate-hike worries
Wall Street’s main indexes opened lower on Friday as a solid July jobs report bolstered the case for the Federal Reserve to continue on its path of aggressive interest rate hikes.The Dow Jones Industrial Average fell 132.92 points, or 0.41%, at the open to 32,593.90.The S&P 500 opened lower by 36.07 points, or 0.87%, at 4,115.87, while the Nasdaq Composite dropped 181.78 points, or 1.43%, to 12,538.81 at the opening bell.
Nykaa Q1 Results
#EarningsWithETNOW | Nykaa Q1 consolidated revenue stands at Rs 1,148 cr vs Rs 973.3 cr QoQ @MyNykaa #StocksToWatch https://t.co/JQYOVcRgQa
— ET NOW (@ETNOWlive) 1659702588000
Tech View: Nifty50 loses momentum, may enter consolidation phase
Nifty50 on Friday ended on a flattish note for the second straight session. The index formed an indecisive candle on the daily chart. On the weekly scale, the index formed a small bullish candle. Analysts said the index might be losing momentum after recent strong gains. They see 17,500 as an immediate resistance level. The level of 17,150 may act as strong support, they said. For the day, the index closed at 17,397.50, up 15.50 points or 0.09 per cent
ED freezes over Rs 64-cr bank deposits of crypto exchange WazirX
The Enforcement Directorate (ED) on Friday said it has frozen bank deposits of Rs 64.67 crore as part of a money laundering probe against crypto currency exchange WazirX. The federal agency said it conducted raids against a director of Zanmai Lab Pvt Ltd, which owns WazirX, on August 3 in Hyderabad and alleged he was “non-cooperative”.The agency’s probe against the crypto exchange is linked to its ongoing investigation against a number of Chinese loan apps (mobile applications) working in India.The agency had charged WazirX last year for alleged contravention of the Foreign Exchange Management Act (FEMA).
Despite the rate hike being on the higher side of the expectations, the market welcomed the RBI’s move of 50 basis hike with rising bond yields. Even though metals prices are softening, RBI decided to keep FY23 inflation targets unchanged at 6.7 percent, which is above the tolerance level. However, given that Q3 and Q4 inflation is anticipated to be between 4.0 percent and 4.1 percent, the market is hopeful for the future.
– Vinod Nair, Head Of Research at Geojit Financial Services
Nifty remained range bound before closing flat for the day. On the daily chart, it formed a Doji pattern which suggests indecisiveness. The momentum indicator RSI is nn bullish crossover. The trend is likely to remain sideways to negative as long as it remains below 17500. On the lower end, support exists at 17200/17000.
– Rupak De, Senior Technical Analyst at LKP Securities
NIFTY AUTO worst performer on NSE
Closing Bell: Sensex rises 89 pts after 1-day break, Nifty ends near 17,400; IndiGo jumps 5%, M&M drops 2%
RBI Governor raised interest rates by 50 bps though our expectations was around 25-35 bps. Despite downward trajectory in inflation and prices of global commodities easing, the uncertainty on geopolitical front, strong demand outlook has given RBI comfort to somewhat frontload the rates. Globalization of inflation and deglobalization of trades has led to a challenging situation to deal with for central bankers. With economic activity broadening, capacity utilization increasing along with rise in consumer expenditures, we believe this hike of 50 bps will give some breathing space to RBI in this rising interest rate cycle which is withdrawal of accommodative stance. Despite interest rate rising, RBI has retained project for growth rate at 7.2% for 2022-23 is a big positive takeaway from this policy. We believe RBI is doing a great job in managing inflation without damaging growth and to add is doing fine job in managing currency.
– Dr Rashmi Saluja, Executive Chairperson, Religare Enterprises on RBI Monetary Policy
Forex reserves rise after falling for four weeks
The country’s foreign exchange reserves rose $2.4 billion during the week ended July 29 after declining for four consecutive weeks as foreign portfolio investors returned back to the Indian markets as net investors. “India’s foreign exchange reserves were placed at $ 573.9 billion as on July 29, 2022” said RBI governor Shaktikanta Das, in his monetary policy statement assessment, a few hours ahead of the official release time of 5.00 pm on Friday.
BSE SmallCap outperforms Sensex
50bps repo rate hike to 5.4% by the RBI makes the policy rate is the highest since Aug ’19. On the positive note, maintaining the real GDP growth forecast of 7.2% for FY23 is liked by the street. It seems to be more worried about external global factors this time, which has weakened INR recently. The 3rd consecutive rate hike by RBI since May’22 cumulatively 140 bps in its effort to contain inflation would certainly increase cost of borrowing and would impact few consumer sectors. We expect real estate sector to remain most affected, while financial sector would be benefited with the likely NIM expansion with higher spread.
– Mr. Mitul Shah, Head of Research at Reliance Securities on RBI Policy
ET NOW Exclusive | Govt allows additional export of sugar. 1.2 lk metric tonne sugar exports
Price as on 05 Aug, 2022 02:44 PM, Click on company names for their live prices.
BSE MidCap outperforms Sensex
Titan Company on Friday reported a 13-fold jump in year-on-year (YoY) net profit at Rs 793 crore in June quarter compared with Rs 61 crore profit in the same quarter last year. The Tata Group firm said its quarterly revenues were the second-best, buoyed by a strong festive demand in a near normal Ql that came after a gap of two Covid disrupted periods.
Price as on 05 Aug, 2022 02:40 PM, Click on company names for their live prices.
The rate hike is very welcome which is why the markets are also reacting by being in the green. There is a lot of excess liquidity in the system that needs to be flushed out. Inflation is currently at 7.1% while the RBI’s target has always been sub-6%, I see additional measures coming up in the next few months. In terms of rate rike, maybe another 50 basis point hike and increase the CRR and SLR reserves to suck out more liquidity from the system.
– Suman Bannerjee, CIO, Hedonova on RBI Policy
Macrotech Developers: Ivanhoe Op India, the real estate arm of Canadian Pension Fund offloaded 70.29 lakh shares or 1.5 per cent stake of realty major at an average price of Rs 1,047.21 apeice and Rs 1,048 for Rs 736.28 crore through open market transactions.
Price as on 05 Aug, 2022 02:31 PM, Click on company names for their live prices.
Moody’s said it has upgraded private lender’s rating while changing outlook to ‘stable’ on the back of its equity capital raise plan announced last week. The global rating agency has upgraded the private sector lender’s long-term foreign currency issuer rating and long-term foreign and local currency back deposit ratings to ‘Ba3’ from ‘B2’.
Price as on 05 Aug, 2022 02:21 PM, Click on company names for their live prices.
Nifty IT shines for the second day running
Price as on 05 Aug, 2022 02:13 PM, Click on company names for their live prices.
Quite likely, going forward we will see a 25 bps rate hike. The terminal repo rate earlier was somewhere around 6-6.25% but last one month’s inflation easing off has brought it down to 5.75-6%. So we are already at a level with this 50 bps hike and can afford to do 25 bps rate hikes over the next six months. Undoubtedly the market will be pricing in a 25 bps rate hike going forward.
– Nilesh Shah, MD, Kotak AMC
European shares steady ahead of U.S. jobs data
The pan-European index STOXX 600 was flat at 0705 GMT amid worries that the U.S. Federal Reserve’s aggressive pace of rate hikes would slow economic growth in the world’s largest economy.
Miners rose 0.6% as copper and most other base metals continued to find support from a weaker U.S. dollar.
Q1 EARNINGS: UCO BANK
#EarningsWithETNOW | UCO Bank Q1FY23 -PAT at Rs 124 cr vs Rs 102 cr YoY -Net NPA at 2.49% vs 2.70% QoQ… https://t.co/KkyWvkmF2X
— ET NOW (@ETNOWlive) 1659684650000
M&M Q1 Results: Profit surges 67% YoY to Rs 1,430 crore but misses estimates
Mahindra & Mahindra (M&M) on Friday reported a 67 per cent year-on-year (YoY) rise in net profit at Rs 1,430 crore compared with Rs 857 crore in the corresponding quarter last year.The profit figure missed the Rs 1,474.90 crore projection by analysts in an ET NOW poll.Revenue for the quarter also grew 67 per cent YoY to Rs19,613 crore from Rs 11,765 crore in the same quarter last year.
Markets were expecting a rate hike between 35-50 bps, so the RBI hike of 50 bps is on the higher side of the expectations. The RBI emphasized that it remains committed to the withdrawal of the liquidity to the contain the inflation. However, the governor did mention that the signs of moderation in inflation are emerging in form of ease in metals and food commodities and inflation is expected to be within the tolerance limit at 5.8% by Q4FY23. There was no forward guidance on the rate trajectory going forward, however, we believe that with much of the front loading behind us and oil prices also easing, RBI will go for a 15bps – 25bps hike in the next MPC meeting.
– Ritika Chhabra- Economic and Quant Analyst, Prabhudas Lilladher
RBI policy was hawkish and the MPC delivered a frontloaded 50 bps rate hike compared to market expectations of 35-40 bps hike, thereby taking the policy rate above pre-Covid levels. The central bank has retained the inflation target for FY23 at 6.7%, despite the softening of base metal and food prices from their earlier highs. The RBI mentioned that the domestic economic activity is showing signs of broadening with improving credit growth, pick-up in investment activity and rising capacity utilization. However, risks like geo political concerns and global financial market volatility and tightening financial conditions will weigh heavily on the outlook. With that, RBI retained the GDP growth forecast for FY23 at 7.2%.
– Sampath Reddy, CIO, Bajaj Allianz Life Insurance
Ahead of earnings…
Price as on 05 Aug, 2022 12:12 PM, Click on company names for their live prices.
With inflation expected to be above 6% for Q2 and Q3, we expect regular RBI interventions in the next 2 quarters – Q2 and Q3 of FY 23 – to ensure rupee stability. With inflation expected to go below 6% in Q4 of FY 23 and then to go down further in Q1 of FY 24, we expect RBI to not to use rate hikes as a tool anymore in those quarters and move to liquidity management measures to ensure that the growth is not stifled. Rural demand still shows a mixed trend despite a broadening economic activity and hence we expect the RBI to use rate hikes more sparingly.
– Vivek iyer- Partner and leader , Financial services risk, Grant Thornton Bharat
RBI MPC voted unanimously hike repo rate by 50 bps to 5.4% – taking to pre pandemic levels. RBI MPC is line with our expectations. Inflation seems to be at the forefront of the move as they maintained CPI forecasts intact at 6.7% for FY 23. To us, this means we are not done with rate hiking cycle yet and we could brace for continued northward journey in rates. Withdrawal of accommodative stance has been maintained. We see this as a “no dovish” undertone policy contrary to markets expecting a dovish stance. Bond markets would now focus on incremental gsec supply and take cues from global bond yields going forward. Staggered investment approach in fixed income stays.
– Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company
RBI’s action and statement today was not as dovish as we expected. Therefore, it is very likely that the terminal rate in this rate hike episode will be higher than our expectations. We, thus, revise it to 5.75-6% from 5.5% expected earlier.
– Nikhil Gupta, Chief Economist at MOFSL Group
The CJI has directed SEBI to furnish the document sought by RIL
The CJI has directed SEBI to furnish the document sought by RIL #SupremeCourt #Reliance #RIL @SEBI_India… https://t.co/moCd6a92mA
— ET NOW (@ETNOWlive) 1659677380000
ET NOW SOURCES
- DIPAM likely to invite financial bids for BEML in Oct
- Demerger scheme of non-core land parcels approved
We had expected the RBI to hike the interest rate by 25-35 basis points. However, it has hiked by 50 basis points. One of the reasons why the RBI has decided to act a tad aggressive in hiking the rate of interest is to protect the Indian currency.
– Sunil Damania, Chief Investment Officer, MarketsMojo
The 50 bp repo rate hike came 15 bp higher than the majority expectation of a 35bp hike. It is evident that the MPC is frontloading the rate hikes since it feels that “CPI inflation is above comfort levels”. The MPC has been emboldened to go for this 50 bp hike since “the economic activity is resilient” and “withdrawal of accommodation stance is necessary to anchor inflation expectations”. The RBI governor went so far as to say that “the Indian economy is holding steady in an ocean of turbulence”. The capacity utilization in industry at 75% is higher than the long-term average. This positive view on the economy has been well received by the stock market in spite of the higher at hand expected repo rate hike.
– Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
CITI INITIATES PAIR TRADE
- Overweight on Zomato; Underweight at Info Edge
- Expect Zomato to outperform Info Edge in the coming quarters
- Zomato’s stock has significantly corrected this year (-60%) vs Info Edge (-20%)
- For Zomato, we think many of the concerns/risks are factored in
- Zomato valuations premium vs global peers is more reasonable
- Info Edge on the other hand faces a few risks
With inflation expected to remain above the upper tolerance threshold in Q2 and Q3 of the current financial year, the MPC stressed that sustained high inflation could de-stabilise inflation expectations and harm growth in the medium term.
– RBI Governor Shaktikanta Das said while announcing the policy decision.
Rise in term deposit rates should increase liquidity for financial sector
– Shaktikanta Das, RBI Governor
Market LIVE Updates: Nifty Auto trades in the red post RBI outcome
RBI POLICY | SHAKTIKANTA DAS ON RUPEE
- RBI will remain vigilant on the liquidity front
- Rupee depreciation has happened in an orderly fashion
- Rupee has lost 4.7% vs the US dollar
- Rupee depreciation on account of strengthening of dollar
- We remain watchful and focused on maintaing the stability of rupee
Consumer price inflation remains uncomfortably high; inflation expected to remain above 6%
– Shaktikanta Das, RBI Governor
Shaktikanta Das on inflation projection for FY23
FY23 Inflation seen at 6.7%Q2: 7.1%Q3: 6.4%Q4: 5.8%
FY23 GDP growth seen at 7.2%, says RBI Governor Shaktikanta Das
RBI POLICY | SHAKTIKANTA DAS SAYS
- Financial sector remains well capitalised
- India’s forex reserves provide insurance against global spillovers
Bond yields rise after RBI decision
#MarketAlert | India's benchmark 10-year bond yield rises to 7.20% after RBI policy decision #RBI #RateHike… https://t.co/lg2yGvHrAS
— ET NOW (@ETNOWlive) 1659674689000
RBI Governor on economy
IMF has revised downwards economic growth projection and expressed risk of recession: RBI Governor Shaktikanta Das
— Press Trust of India (@PTI_News) 1659674483000
Inflation expected to remain above tolerance levels
– Shaktikanta Das, RBI Governor
POLICY OUTCOME | RBI GOVERNOR SAYS
- Financial markets have remained uneasy despite heavy intervention
- Core inflation remains at elevated levels
- MPC noted domestic economy resilient
Sensex reaction to RBI policy move
MPC focussed on withdrawal of liquidity: RBI Governor
RBI MPC hikes repo rate by 50 bps to 5.40%
Witnessed large portfolio outflows of $13.3 billion so far
– Shaktikanta Das, RBI Governor
RBI POLICY | SHAKTIKANTA DAS SAYS
- Successive shocks to global economies taking its toll
- EMs face rapid tightening of external financing
- Global, domestic risks for EM economies have magnified
Rupee volatility hits over 4-mth high ahead of RBI
The Indian rupee’s volatility, measured in terms of the daily close-to-close, reached its highest level since late-March ahead of the Reserve Bank of India’s policy decision. The RBI is widely expected to raise the repo rate as it continues its battle to control inflation. Economists, however, differ on the size of the rate hike that the RBI will deliver as the central bank aims to strike the right balance between inflation and growth.
India bond yields fall ahead of RBI policy decision (Source: Reuters)
The 10-year bond yield was trading at 7.1141%, as of 0340 GMT, after ending at 7.1566% on Thursday.
The benchmark Brent crude oil contract ended 3.7% lower at $94.12 per barrel on Thursday amid worries over fuel demand.
The private lender will wind up its UK subsidiary following termination of an agreement to sell 100 per cent of the stake to OpenPayd Holdings. In March 2021, Axis Bank had informed the exchanges about entering into a share purchase agreement with OpenPayd Holdings for sale of 100 per cent stake in Axis Bank UK.
Price as on 05 Aug, 2022 09:55 AM, Click on company names for their live prices.
Rupee moves above 79 per dollar
Rupee rises 46 paise to 78.94 against US dollar in early trade
— Press Trust of India (@PTI_News) 1659672023000
Chris Wood in his latest Greed & Fear note
#MarketsWithETNOW | Chris Wood in his latest Greed & Fear note: – Markets pricing in 50 bps of rate cuts next yea… https://t.co/IgeGAEUDYX
— ET NOW (@ETNOWlive) 1659671439000
Market View: Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
The momentum in the market now is influenced by global cues and strong FII buying which has crossed Rs 5300 cr so far in August. The decline in Brent crude to $94 is positive for India’s macros and the dip in dollar index to below 106 again augur well for capital flows to India.FII buying happening in sectors like capital goods, FMCG, construction and power is likely to impart resilience to these segments.
Most active stocks on NSE in early morning session
Price as on 05 Aug, 2022 09:22 AM, Click on company names for their live prices.