The benchmark stock indices opened the day on a bullish note looking ahead to the RBI’s policy announcement.
Join us as we follow the top business news through the day.
RBI to review guidelines on credit default swaps
An important regulatory move coming from the RBI.
PTI reports: “The Reserve Bank of India (RBI) on Friday said it will review the guidelines on credit default swaps to facilitate the development of the credit derivatives market.
The central bank will soon issue draft directions for public comments in this regard.
“With the recent enactment of the legislation for Bilateral Netting of financial contracts providing a fillip to the underdeveloped credit derivatives market in India, it has been decided to review the extant guidelines on Credit Default Swaps (CDS) and issue draft directions for public comments shortly,” RBI Governor Shaktikanta Das said while announcing the monetary policy.
The revised directions are expected to facilitate the development of credit derivatives market and a liquid and vibrant market for corporate bonds, especially for low-rated issuers, he said.
The CDS guidelines were last issued in January 2013.
The RBI said it has also reviewed the comprehensive guidelines on derivatives, issued in November 2011, and will issue the draft directions for public comments later on Friday.
“The revised guidelines seek to promote efficient access to derivative markets while ensuring high standards of governance and conduct in Over the Counter (OTC) derivative business by market makers,” Das said.
RBI will also release comprehensive draft directions on call, notice and term money markets, Certificate of Deposits (CDs), Commercial Papers (CPs) and Non-Convertible Debentures (NCDs) with original maturity of less than one year for public feedback later on Friday.
“The revised directions seek to bring consistency across products in terms of issuers, investors and other participants,” Das said.
He said these announcements may sound technical but they will go a long way in promoting and developing the corporate bond market and the derivatives market in India.
“Time will tell how effective they are but we are very optimistic that this will definitely give a fillip to the corporate bond market segment and also to the money markets,” Das said.
The Monetary Policy Committee (MPC) on Friday left key interest rates unchanged but decided to maintain an accommodative stance.”
RTGS to be made available 24X7 in next few days: RBI Governor
In a business friendly move, the Reserve Bank of India on Friday said that the Real Time Gross Settlement (RTGS) system, used for large value transactions, will be made available round-the-clock in the next few days.
In December 2019, the National Electronic Funds Transfer (NEFT) system was made available on a 24x7x365 basis.
Currently, RTGS is available for customers from 7.00 a.m. to 6.00 p.m. on all working days of a week, except second and fourth Saturdays of every month.
RBI Governor Shaktikanta Das said, “RTGS system will soon be made available 24×7 in the next few days… with this enablement, it is proposed to reduce settlement and default risk in the system by facilitating settlement of AePS, IMPS, NETC, NFS, RuPay, UPI transactions on all days of the week instead of five days earlier.”
“This will make the payment ecosystem more efficient,” he added.
Highlights of RBI’s monetary policy statement
PTI reports on talking points from RBI’s policy decision this morning.
* Benchmark rate kept unchanged for third time in a row at 4 pc
* Indian economy expected to contract 7.5 pc this fiscal, lower than 9.5 pc contraction projected in Oct
* Economy to clock growth of 0.1 pc in Q3; Q4 to see 0.7 pc growth
* Retail inflation projected at 6.8 pc in Q3, 5.8 pc in Q4
* Inflation to remain elevated, barring transient relief in the winter months
* Fiscal stimulus moving beyond being supportive of consumption and liquidity to supporting growth-generating investment.
* Private investment still slack and capacity utilisation has not fully recovered
* RBI to use various instruments at appropriate time to ensure ample liquidity is available in system
* RBI ready to take further measures to ease liquidity; will continue to respond to global uncertainty
* RBI to maintain accommodative monetary policy stance to support growth, keep inflation at targeted level
* To raise limit for contactless card transaction from Rs 2,000 to Rs 5,000 per transaction from January
* RTGS system to be made 24X7 in next few days
* Commercial, cooperative banks to retain profit made in 2019-20; not to make any dividend payment
* RBI committed to preserving depositors’ interest in the financial system.
Indian shares hit record highs as central bank keeps rates steady
The RBI’s monetary stance has turned out to be bullish for stocks.
Reuters reports: “Indian shares hit record highs on Friday after the country’s central bank kept interest rates steady in the face of stubbornly high inflation, while also retaining its accommodative monetary policy stance.
Reserve Bank of India (RBI) Governor Shaktikanta Das said India’s prospects have brightened with progress on COVID-19 vaccines, consumer confidence has turned positive and projected real GDP for the current financial year to contract just 7.5%.
The NSE Nifty 50 index was up 0.80% at 13,239.05 as of 0512 GMT, while the S&P BSE Sensex was up 0.80% at 44,993.92. Both indexes hit record highs. The Indian rupee strengthened to 73.72 against the dollar.
All 53 analysts and economists in a Reuters poll conducted in November said they did not expect any change in rates at the three-day policy meeting ending Friday.
“RBI has been extremely proactive in terms of providing support to the economy and to the market in whichever way possible,” said Avneesh Sukhija, senior financial analyst at BNP Paribas India.
Today’s decision marks a continuation from October’s decision of entering a revival mode from survival, Sukhija added.
Including today’s session, the benchmark indexes have hit record highs for 11 of the last 18 sessions, boosted by progress in developing a working coronavirus vaccine. They added more than 11% in November on record inflows from foreign institutional investors.
The RBI has already cut its key interest rate by a total 115 basis points this year to revive growth and cushion the impact of the COVID-19 pandemic.
Rate-sensitive financial stocks also rose after the policy announcement. The Nifty Banking index, which surged nearly 24% in November, was up 1.27%.
UltraTech Cement Ltd rose as much as 6.2% to a record high, a day after the cement manufacturer said it would invest 54.77 billion rupees to expand capacity.”
HCL’s Roshni tops list of India’s richest women
HCL Technologies chairperson Roshni Nadar Malhotra, with a net worth of ₹54,850 crore, tops the Kotak Wealth Hurun list of India’s wealthiest women.
Trailing her is Biocon’s Kiran Mazumdar-Shaw with a net worth of ₹36,600 crore. In the third spot is Leena Gandhi Tewari of the Mumbai-headquartered pharmaceuticals firm USV, with a net worth of ₹21,340 crore. The list of 100 richest women is based on their estimated net worth as on September 30. The cumulative wealth of those on the list is ₹2,72,540 crore.
The threshold for the ranking was a net worth of ₹100 crore. According to a release, the 2020 edition of the report focusses exclusively on women who play an active role in their family business, entrepreneurs and professionals. There are 31 self-made women in the list and among them Ms. Shaw is at the top spot, followed by Radha Vembu of Zoho (sister of Zoho founder Sridhar Vembu) with a net worth of ₹11,590 crore and Jayshree Ullal, CEO of Arista Networks, with ₹10,220 networth. Of the 31 self made women, six are professional managers and 25 entrepreneurs.
Corona vaccine faces a supply chain problem
Rupee rises 16 paise to 73.77 against US dollar as RBI maintains status quo on interest rate
RBI policy announcement bullish for the Indian currency.
PTI reports: “The rupee appreciated by 16 paise to 73.77 against the US dollar in the opening session on Friday as the Reserve Bank of India maintained status quo on benchmark interest rate for the third time in a row.
Traders said sustained foreign fund inflows, positive opening in domestic equities and weakness of the American currency in the overseas market also supported the local unit.
At the interbank forex market, the domestic unit opened at 73.81 against the US dollar and gained ground to touch a high of 73.77 against the greenback, registering a rise of 16 paise over its previous close.
On Thursday, the rupee had settled at 73.93 against the American currency.
The Reserve Bank of India on Friday maintained status quo for the third time in a row and kept benchmark lending rate unchanged at 4 per cent.
RBI Governor Shaktikanta Das said the central bank will maintain accommodative monetary policy stance to support growth and keep inflation at the targeted level.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.02 per cent to 90.69.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,637.42 crore on a net basis on Thursday, according to exchange data.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 343.73 points higher at 44,976.38, and the broader NSE Nifty rose 97.90 points to 13,231.60.
Brent crude futures, the global oil benchmark, was trading 1.93 per cent higher at USD 49.65 per barrel.”
RBI keeps key rates unchanged
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday kept policy rates unchanged and maintained an accommodative stance to help the economy deal with the adverse impact of the COVID-19 pandemic.
The key lending rate of the RBI or the repo rate was left unchanged at 4% while the reverse repo rate, or the rate the RBI pays when funds are parked with it, stayed at 3.35%.
The RBI has also projected the ongoing GDP contraction to narrow to 7.5% this fiscal with the economy returning to growth of 0.1% in Q3 and expanding 0.7% in Q4 of FY21.
Governor Shaktikanta Das, while announcing the policy, said inflation still remains a concern as RBI sees core inflation remaining sticky. He projected retail inflation to average 6.8% in Q3, before moderating to 5.8% in Q4.
The RBI also announced a host of measures for liquidity management and to deal with exchange rate risks.
Sensex jumps over 200 points ahead of RBI policy outcome; Nifty tests 13,200
A bullish start to the day for stocks ahead of the RBI’s interest rate decision.
PTI reports: “Equity benchmark Sensex jumped over 200 points in early trade on Friday tracking gains in index majors HDFC Bank, L&T and ICICI Bank ahead of the Reserve Bank of India’s monetary policy outcome.
The 30-share BSE index was trading 202.71 points or 0.45 per cent higher at 44,835.36.
Similarly, the broader NSE Nifty was trading 66.10 points or 0.50 per cent up at 13,200.
UltraTech Cement was the top gainer in the Sensex pack, rising around 4 per cent, followed by L&T, M&M, Maruti, ONGC, Bharti Airtel, PowerGrid and ITC.
On the other hand, Asian Paints, Infosys, Reliance Industries and Tech Mahindra were among the laggards.
In the previous session, Sensex ended 14.61 points or 0.03 per cent higher at 44,632.65, while Nifty settled 20.15 points or 0.15 per cent up at 13,133.90 — its lifetime closing high.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,637.42 crore on a net basis on Thursday, according to provisional exchange data.
Domestic equities continue to look resilient and firm. A continued foreign fund flow remains a key driver for markets, said Binod Modi Head-Strategy at Reliance Securities.
“Outcome of the Reserve Bank’s policy meeting would be crucial for the day. While RBI is broadly expected to maintain status quo, any sort of hawkish commentary, given the concerns over inflation due to excess liquidity, might result in hardening of bond yields and BFSI may come in pressure,” he noted.
Given current valuations, a sharp up-move in broad indices looks difficult, he said, adding that midcap and smallcap outperformance should continue to persist in the near term.
US markets finished mostly higher as investors continued to focus on renewed hopes on fiscal stimulus.
“However, benchmark indices came off day’s highs after Pfizer announced that it will be able to ship only 50 per cent of targeted vaccines in 2020 due to supply chain issues.
“A record surge in new COVID-19 cases, which touched 2 lakh on Wednesday, is being overshadowed by increasing possibility of agreement on COVID-19 relief package in coming days. However, the quantum of fiscal aid might not excite the street,” he added.
Elsewhere in Asia, bourses in Shanghai, Hong Kong and Tokyo were in the red in mid-session deals, while Seoul was trading with gains.
Meanwhile, the global oil benchmark Brent crude futures were trading 1.81 per cent higher at USD 49.59 per barrel.”
Aviation loss to widen to ₹21,000 cr. in FY21: ICRA
The Indian aviation industry is estimated to report a significant net loss of ₹21,000 crore in FY21, against a net loss of ₹12,700 crore in FY20, with the industry debt level increasing to ₹50,000 crore (excluding lease liabilities) over FY21-22, ICRA said in a report.
The rating agency said the industry would require additional funding of ₹35,000-₹37,000 crore over FY21-23.
“The two listed airlines [IndiGo and SpiceJet] have together lost ₹31 crore per day during H1 FY21. As the airlines gradually recommenced domestic operations, along with continued chartered and cargo operations, thereby resulting in significantly higher yields, their daily cash burn started reducing,” Kinjal Shah, VP, ICRA Ltd., said. “This resulted in a lower daily loss of ₹26 crore for the two listed airlines in Q2 FY2021, against ₹37 crore in Q1 FY2021,” she said.
“With a sequential improvement in domestic passenger traffic, and continued cost rationalisation initiatives by the airlines, further supported by the benign aviation turbine fuel (ATF) prices, the daily cash burn for airlines has further reduced in Q3 FY2021,” Ms. Shah said.