The News International Team
9:50 am RBI opinion: Commending the RBI on its move to cut interest rate, Chief Economic Adviser Arvind Subramanian said it also showed that the central bank and the government were on the same page, with regard to their economic outlook. In an interview to CNBC-TV18, Subramanian said the rate cut also showed that the Union Budget was conducive to non-inflationary growth. He said the rate cut was what the economy needed at this stage, and that it was consistent with the data in the Economic Survey as well as the Budget.
Read more at: http://www.moneycontrol.com/news/economy/rate-cut-shows-rbigovtsame-page-chief-econ-adviser_1320135.html?utm_source=ref_article
9:40 am Market outlook: Adrian Mowat, managing director, chief Asian and emerging market equity strategist, JPMorgan said this is a positive surprise and will make people buy the market. “We can see the market tracking higher quite easily on the back of what has happened here,” he told CNBC-TV18.
Gautam Chhaochharia, head of India research, UBS Securities on the other is not ready to change sector mix. He believes growth will surprise negatively going ahead, while interest rates will surprise positive. This rate cut, according to him proves that the RBI too is of the same view. However, he says it will be positive for financials. Chhaochharia adds a part of the market was worried that RBI may not be as much on rate cycle in terms of cutting rate by100 bps through the year. This, he adds, will give them confidence that this is a secular track and not just a one off.
9:30 am Reaction to RBI move: Ananth Narayan, head, Financial Markets, Standard Chartered Bank said the move wasn’t totally unexpected though it is a ‘reluctant’ rate cut. “It (rate cut) puts a lot of question marks about inflation; it puts question marks about the fisc. So, one doesn’t know whether this is a pre-emptive cut for the April 7 policy or whether there is a follow up cut which will happen in April as well,” he said in a discussion on CNBC-TV18. MS Raghvan of IDBI believes rate cut will be good both for the industry and the economy. According to him, the timing of the rate cut was surprising and he expects another 50 bps cut over the course of the year.
Don’t miss: Early Holi on D-Street as banks surge on RBI repo rate cut
The market has opened at record high after Reserve Bank of India, in a surprise move, cut repo rate by 25 basis points to 7.5 percent. The Sensex is up 407.43 points or 1.4 percent at 30001.16, and the Nifty is up 112.90 points or 1 percent at 9109.15. About 533 shares have advanced, 94 shares declined, and 93 shares are unchanged.
The Reserve Bank of India signaled that it was convinced by the fiscal consolidation measures announced in the Budget. The RBI has kept the cash reserve ratio (CRR) unchanged at 4 percent.
“Disinflation is evolving along the path set out by the Reserve Bank in January 2014 and, in fact, at a faster pace than earlier envisaged,” the RBI said in its statement for the reasons behind the rate cut. This is the second out of turn 25 basis point-cut after the one in January.
It is a celebration time for the bank stocks with major gainers like SBI, ICICI Bank, Axis Bank and HDFC. M&M is also up 2 percent. Among the losers are Dr Reddy’s Labs, GAIL and Wipro.
The Indian rupee opened higher by 26 paise at 61.66 per dollar.
Himanshu Arora of Religare said, “The USD-INR pair is expected to strengthen today amid persistent upside in dollar against a basket of currencies and will continue to react to India’s January fiscal deficit surpassing the full year target. However, upside to the dollar may remain capped as German Parliament approves Greek bailout extension. The USD-INR pair is expected to trade in the range of 61.76-62.18/dollar.”
The dollar hovered below an 11-year high versus a basket of major currencies, as investors await US economic data and a European Central Bank meeting later this week for fresh direction clues.