Sensex dips 132 pts as RBI cuts FY22 GDP growth; Nifty ends below 15,700

That said, market participants continued to buy stocks in the broader markets after the RBI announced a special, Rs 15,000 crore-liquidity window

12:25 PM

NEWS ALERT :: RBI deputy guv Michael Patra says

>> Inflation is persistent only when demand is high

>> However, at the moment, there is no demand pressure in the economy. Therefore, we are not concerned about elevated inflation.

>> If at all demand pressures begin to creep in, the RBI will take appropriate steps.

12:24 PM

RBI Deputy Governor Patra

>> Forward FX rate is a market outcome
 

>> Stand ready to take action to cool forwards as necessary

12:20 PM

RBI Governor: Not thinking at the moment about normalising policy stance

>> Hike in CPI inflation forecast not significant

12:19 PM

NEWS ALERT :: RBI Governor says

>> Covid-19 cases have come down sharply over the past 2 weeks

>> Expect demand situation to improve from Q2FY22 onwards

12:16 PM

RBI GOVERNOR :: We remain focussed on orderly evolution of bond yield

>> Gilt yield curve inverted due to abundant liquidity

>> Bond yields haven't really gone up
 

>> Inflation print gives scope to step up on liquidity operations

12:13 PM

NEWS ALERT | Nothing sacrosanct about 6% 10-year yield: RBI Governor

-- We are focused on the entire yield curve across maturities, not just 10-year: RBI Guv

-- G-Sap auctions included bonds of several maturity profiles: RBI Guv

12:01 PM

Q4 results :: Bharat Forge

> Revenue at Rs 1307.4 cr vs Rs 881.2 cr YoY

 

> EBIDTA at Rs 333.2 cr vs Rs 148.2 cr YoY

 

> PAT at Rs 205.5 cr vs Rs loss of Rs 73.2 cr YoY
 

11:50 AM

COMMENT :: Madhavi Arora, Lead Economist, Emkay Global

While we do not see any action on the policy rate front in the coming months, we are poised to see a more accountable and action oriented RBI ahead. We reckon even as yields may inch up gradually and orderly, the RBI will continue to strive fixing skewed yield and maintain its preference for curve flattening (with GSAPs and OMOs). We see net OMO + GSAP purchases to the tune of Rs4.5-5tn in FY22

11:46 AM

COMMENT :: Dr. Aurodeep Nandi, India Economist & Vice President at Nomura

Monetary policy hand-eye coordination is getting increasingly complicated, as the second wave is impacting growth comes at a time of rising inflationary pressures. The RBI’s policy actions today were largely on expected lines — keeping all three levers — rates, stance and forward guidance unchanged and dovish, while relying on G-SAP as a tool to deliver further accommodation and to prevent any premature tightening of financial conditions.

For now, we expect the RBI to remain accommodative for the foreseeable future, and the timing of the RBI’s ‘policy pivot’ towards normalization will remain crucially contingent on the economy’s ‘vaccine pivot’ towards sustainable growth recovery

11:46 AM

COMMENT :: Suvodeep Rakshit, V-P & Senior Economist, Kotak Institutional Equities

Markets could be slightly disappointed with the last tranche of GSAP 1.0  including SDL within the Rs400 bn limit, especially, after the announcement of a possible Rs1.58 tn borrowing by center as back-to-back loans to the states. However, this would be a policy that is in line with market’s expectations. GDP growth estimate for FY2022 was revised down to 9.5%, again broadly in line with  consensus estimates. We expect GDP growth at 9%. Estimate for average inflation was marginally revised higher to 5.1%. We estimate average CPI inflation at 4.9%.

11:44 AM

COMMENT :: Aditi Nayar, vice-president and principal economist, ICRA

While the MPC's real GDP growth projection of 9.5% is in line with the upper end of our own forecast range of 8-9.5%, we believe that accelerated vaccine availability, resulting in a back-ended surge in domestic demand, is central to this outcome. Such a resurgence in demand may however be inconsistent with an average CPI inflation of 5.1% in FY2022, unless taxes on fuels undergo an appreciable reduction.

 

The inclusion of SDL in the last tranche of GSAP 1.0 is likely to temporarily moderate the 10 year G-sec-SDL spread below the prevailing 80 bps. Nevertheless, a sustenance of lower spreads may require continued purchases of SDL by the Central Bank through GSAP or regular OMO.

Aditi Nayar, principal economist, ICRA

11:40 AM

RBI Policy Reaction

With growth slowing and rise in inflationary pressures, RBI expectedly kept a status quo on the policy rates and maintained accommodative stance, signalling continuation of easy financial conditions. Downward revision in FY22 GDP growth projection to 9.5% was quite expected, but seems little optimistic when compared with consensus estimates. Nevertheless, RBI pursued its broad intent of plugging weak spots in the economy by providing on tap liquidity with additional lending to distressed and contact-sensitive sectors.

 

On inflation, the CPI projection of an average of 5.1% for FY22 looks credible as higher oil and commodity prices is leading to elevated price pressure. Though healthy monsoon and higher crop output may somewhat contain food inflation. Announcement of another round of G-SAP and devolvement of various bond auctions clearly convey RBI’s stance on interest rates and government borrowing costs.  

 

On the repo rate, we have hit the floor, with further rate cut completely ruled out given the prevalent negative real interest rates. With the space for traditional monetary policy being constricted, we expect the RBI to continue to use its balance sheet to keep financial market conditions easy.

-- Amar Ambani, Senior President and Head of Research – Institutional Equities, YES Securities

11:35 AM

Hotel, liquor shares gain post RBI policy; Indian Hotels hits 52-wk high

“In order to mitigate the adverse impact of the second wave of the pandemic on certain contact-intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022 with tenors of up to three years at the repo rate,” RBI Governor Shaktikanta Das said in the monetary policy statement. READ MORE

11:21 AM

NEWS ALERT | The global economic recovery has been gaining momentum: RBI

-- This has been driven mainly by major advanced economies (AEs) and powered by massive vaccination programmes and stimulus packages

-- Activity remains uneven in major emerging market economies, with downside risks from renewed waves of infections

11:21 AM

RBI Policy Reaction | Deepthi Mathew, Economist at Geojit Financial Services

In an expected move, RBI maintained the status quo in policy rates. To support and revive the economy, RBI would continue with the accommodative stance as long as it is needed. The Governor cautioned about the factors that could put upward pressure on inflation. The announcement of G-SAP 2.0 at INR 1.2 lakh crore for Q2FY22 shows RBI’s commitment to keeping the bond yields in check. The inclusion of SDL on G-SAP would support state government borrowings from the market.