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Inflation down to a 5-year low
Friday, 9 November, 2007
New Delhi, Nov 8 (ANI): The inflation has dipped down to 2.97 per cent, the lowest in the last five years.
The below 3 per cent mark for the week ending October 27 has been attributed to dip in the prices of cereals, pulses, fruits and vegetables.
This is lower than the Reserve Bank of India's target of 3 per cent. (ANI) --MP Labels: Finance
RBI raises CRR by 0.5 percent
Wednesday, 31 October, 2007
MP: Mumbai, Oct 30 (ANI): The Reserve Bank of India (RBI) today raised
the proportion of cash that banks have to keep with them on deposit by
50 basis points to 7.5 percent to mop up excess funds, but kept its
key lending rate at 7.75 percent. "The status quo of monetary policy can continue. Except one and that
is the huge liquidity. Therefore what is overhang of liquidity, we had
to take care. Therefore, we have proposed a CRR increase of 50 basis
points, which will take care of a part of the overhang of liquidity,"
said RBI Governor Y V Reddy. "This does not signify any view about the future evaluation about
liquidity or the capital flow. Our response will depend on the way
these things will work in the future," he added. The RBI has kept the Reverse Repo rate unchanged at six percent. This
is the rate at which the RBI borrows funds from the market. It impacts
government bond yields and short-term bank deposits. It kept the Repo Rate steady at 7.75 percent. This is the rate at
which the central bank adds funds to the money market. It kept the bank rate unchanged at six percent. Banks use this rate to
price their long-term loans to individuals and companies. The RBI's step on the monetary policy is aimed at: Reinforcing the emphasis on price stability and well-anchored
inflation expectations while ensuring a monetary and interest rate
environment that supports export and investment demand in the economy
so as to enable continuation of the growth momentum. It is also to re-emphasise credit quality and orderly conditions in
financial markets for securing macroeconomic and, in particular,
financial stability while simultaneously pursuing greater credit
penetration and financial inclusion. Further, it is to respond swiftly with all possible measures as
appropriate to the evolving global and domestic situation impinging on
inflation expectations, financial stability and the growth momentum. Finally, the bank is ensuring that it is in readiness to take recourse
to all possible options to maintain stability and the growth momentum
in the economy in view of the unusual heightened global uncertainties,
and the unconventional policy responses to the developments in
financial markets. The bank reiterates its power to retain option to conduct repo/reverse
repo auctions at a fixed rate or at variable rates as circumstances
warrant. And also it reiterates to retain the option to conduct overnight or
longer term repo/reverse repo depending on market conditions and other
relevant factors. The RBI kept the GDP forecast for 2007-08 at 8.5 percent. The central bank said its policy endeavour would be to keep inflation
close to five per cent in 2007-08. (ANI) Labels: Finance
RBI Policy along expected lines, says industry honchos
MP: New Delhi, Oct.30 (ANI): The Mid Term Review of the Annual Monetary Policy announced by RBI today is on expected lines, said CII in a Press Release issued here today. However, keeping in mind the international trends in interest rates and particularly the indications coming in from the US, CII feels that the RBI could have considered an interest rate (Repo Rate) cut to go along with the CRR hike of 50 bps.
CII has observed that the hike in CRR would effectively suck out about Rs. 15500 crores from the system.
The press release said that CII has taken note of the statement, which says that the RBI would move "swiftly" in case of global developments.
The release also mentioned that CII feels that the RBI has clearly indicated that it is attaching more importance to liquidity compared to concerns on growth. The press release said that CII fully appreciates the RBI Governor's difficulties in dealing with the twin challenge of managing liquidity and consequent inflationary expectations on the one hand and boosting demand and hence growth, on the other.
CII only wondered how the RBI would react in the eventuality of the US Federal Reserve cutting interest rates tomorrow, since another round of interest rate cut would increase the propensity of more foreign funds coming into India through the ECB route, which would obviously add to the concern of the RBI. This challenge of increased foreign exchange inflow would further get accentuated and consequent pressure on the rupee by expanding the interest rate differentials between India and the US.
However, a moderate cut in interest rate in India at this point of time would have probably dealt with this situation better, said the CII release.
The RBI announcement has allowed Oil companies to hedge foreign exchange exposures by using over-the-counter (OTC)/ exchange traded derivatives up to a maximum of one year forward. CII feels that this is an opportunity, which India could have leveraged by developing currency exchanges to facilitate such hedging, said the release.
CII also said that it has taken note of the RBI's efforts at liberalising foreign exchange transactions, strengthening risk management in banks, migration to Basel II and fine-tuning of supervisory processes.
CII observed that the RBI has also attempted to develop an integrated financial market, improve credit delivery mechanism, particularly to agriculture and small and medium enterprises, which is welcome. (ANI) Labels: Finance
Indian-origin researcher reveals the rewards and pitfalls of optimism
MP: Washington, October 30 (ANI): People who believe in positive thinking are more likely to display prudent financial behaviours, but being extremely optimistic may cause a person to have short planning horizons and act in ways that are generally not considered wise, suggests a study.
Manju Puri and David Robinson, professors of finance at University's Fuqua School of Business, say that they have developed a novel method to assess individuals' levels of optimism. They used data from the Federal Reserve Board's Survey of Consumer Finance (SCF), a triennial assessment of U.S. families' financial and demographic information, for the purpose.
Although the SCF does not ask about optimism directly, it does ask respondents how long they expect to live. It also collects demographics, and health-related information similar to the one that actuaries use to estimate life expectancy.
The researchers combined the data to determine participants' statistical life expectancies. Thereafter, they compared the statistical and self-reported life expectancies, and categorized anyone who expected to live longer than the data predicted as an optimist.
"Most of the information we needed was already there, but we had to create a new way of combining it with other existing data in order to extract meaning about optimism," Puri said.
The researchers labelled the top five per cent of optimists, who thought that they would live an average of 20 years longer than what was suggested by the statistics, as "extreme optimists".
They found that optimism indeed related to a large number of behaviours.
According to them, while optimism can lead to wise decision-making, extreme optimists "display financial habits and behaviour that are generally not considered prudent."
"The differences between optimists and extreme optimists are remarkable, and suggest that over-optimism, like overconfidence, may in fact lead to behaviours that are unwise," said Puri.
The study's authors said that the new findings could lead to useful ways to consider individuals' investment and career planning decisions, and help people understand or overcome personality characteristics that could negatively affect important financial decisions.
"Doctors tell us that one or two glasses of red wine a day can be really healthy. But no one tells you to drink the whole bottle. It's the same with optimism. A little bit is really beneficial, but too much can lead to some really bad economic choices," Robinson said.
The study has been published in the Journal of Financial Economics. (ANI) Labels: Finance
Sensex touches 20,000-point mark
Monday, 29 October, 2007
MP: Mumbai, Oct 29 (ANI): The Bombay Stock Exchange's benchmark 30-share Sensex after breaching the 20,000-point mark on Monday for the first time, closed at 19,977, up 734 points from the previous close.
It took 10 trading sessions for the index to move from 19,000 to 20,000.
The Nifty ended the day at 5900, up 198 points.
The biggest contributors to this rally were ICICI Bank, Larsen & Toubro (L&T) and Reliance Industries (RIL). (ANI) Labels: Finance
Sensex crosses 19000-point mark again
Friday, 26 October, 2007
MP: Mumbai, Oct 26 (ANI): The Bombay Stock Exchange's benchmark 30-share Sensex crossed the 19000-point mark on Friday, following Security and Exchange Board of India's (SEBI) decision to partially restrict Participatory-Notes.
The Sensex closed at 19,243, up 472 points, while Nifty closed at 5702, up 133 points from the previous close.
The Sensex touched a high of 19,276 levels in intra-day deals.
The SEBI, India's stock market regulator, on Thursday, said it would go ahead with planned curbs on the use of an investment route by unregistered investors overseas.
Initially, investors seemed cautious ahead of SEBI's board meeting on Thursday to decide on restrictions on P-Notes amid reports that the Reserve Bank of India (RBI) has reiterated its earlier stance of a complete ban on P-Notes. Activity, however, was picked up as investors continued to roll over positions to next series indicating the market's bullish undertone.
The buoyancy in the markets on Friday was accounted for by the buying spree of foreign and domestic funds in capital goods and metal segments resulting in the 30-share index, Sensex, gaining 276.23 points to climb over 19, 047.12, a record peak set on October 14.
SEBI has said it wants to limit the use of participatory notes (P-Notes), which it says allow foreigners to make a backdoor entry into the market without registering. It wants foreign portfolio investors to register so it knows the source of funds coming into the country.
"The way SEBI chief yesterday announced, the market has reacted positively, even the FII. Because as he mentioned, yesterday that many of the foreign investors have submitted their forms for registration. This is a very good step that the SEBI chief has taken," said Siddhart Kuanwala, an investor.
The benchmark Sensex surged as investors engaged in hectic buying on the Bombay Stock Exchange and shares of Tata Steel and ICICI Bank registered sharp rise.
India's stock market regulator tightened investment rules for unregistered foreigners as expected on Thursday by clamping down on issuance of indirect investment notes to stem inflows of anonymous money.
Analysts thought in the long run the new rules would not deter foreign funds from the world's second fastest-growing economy after China, especially as the SEBI has pledged to speed up registration of foreign institutional investors (FIIs).
"Yesterday, the meeting held with SEBI was a positive one because they announced that they are not against the FIIs coming in. SO, as the news came in, it has been seen that many FIIs ate registering," said Vikas, another investor.
P-notes are issued by foreign institutional investors (FIIs) registered in India to unregistered overseas investors. Registered FIIs buy Indian securities and issue the notes based on the underlying asset. (ANI) Labels: Finance
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