Ratings agency S&P has warned that the chances of India’s sovereign credit being downgraded to junk is more than one in three, as the economy battles with unsustainable current account and fiscal deficits.
But foreign institutional investors (FIIs) see reasons for cheer as growing inflows send Indian equity markets soaring. On Monday, India’s benchmark Nifty index surged 31 points to 6,229.45, its highest since November 2010. The Sensex too gained 163 points to 20,443.62, its highest since January 2011. Both indices have gained in every session in the past week. What’s going on? And will this rally last? Continue reading »
For a poor country, India has expensive taste.
It is the world’s biggest importer of gold – a pricey habit that has taken its toll on the country’s current account deficit. So is the recent tumble in the gold price just what India’s economy needs? Continue reading »
Inflation is finally slowing in India – good news for consumers, and for policy makers looking for room to cut rates.
In March, annual inflation based on the Wholesale Price Index came in at 5.96 per cent, the slowest rate in years, down from 6.84 per cent a month earlier. Continue reading »
Indian inflation increased unexpectedly in February – bad news for the Indian government after a general strike was called last month partly in protest against price increases.
The Wholesale Price Index, India’s main measure of prices, was up 6.84 per cent year-on-year in the month of February, where the average forecast in a Reuters poll of analysts was for an increase of 6.54 per cent. It doesn’t leave much room for manouvre on rates. Continue reading »
India’s industrial production increased in January – only the fourth month out of the past ten to see positive growth.
The index of industrial production was up 2.4 per cent year-on-year this January, double the 1.2 per cent rate forecast in the market. But one month’s growth doesn’t mean recovery is imminent.
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Inflation is slowing unexpectedly fast in India, according to figures published on Thursday.
The wholesale price index (WPI) – India’s main measure of prices – was just 6.62 per cent year-on-year in January, slowing from the December rate of 7.18 per cent from and 7.23 per cent in January 2012. Continue reading »
The Reserve Bank of India is widely expected to cut interest rates on Tuesday.
But by how much, nobody knows. Will the rate be reduced by 25 or 50 basis points? And contrarian analysts are even wondering whether loosening monetary policy is a good idea right now. Continue reading »
There are fewer sights that central bankers like more than inflation coming down, but that might not be enough for the Reserve Bank of India to cut rates.
While India’s WPI inflation figure eased beyond most economists’ expectations (of 7.6 per cent) to 7.2 per cent for November, down from October’s 7.5 per cent, analysts are sticking to the prediction for a hold in rates next week. Continue reading »
India’s industrial production grew 8.2 percent year-on-year in October, far exceeding analysts’ expectations of 5.1 per cent.
But the figures may be deceptively positive. With the date of Diwali moving to November from October last year, seasonal factors are creating a base effect – which will switch in November, so there could be disappointment to come. Continue reading »
India inflation in July came in well below expectations, according to data released Tuesday, but economists said the 6.87 per cent figure – down from 7.25 per cent last month – is unlikely to move the Reserve Bank of India to cut rates at its next meeting on September 17.
Provisional export data, also released on Tuesday, showed a 14.8 per cent fall in July exports, to $22.4bn, and a 7.61 per cent fall in imports, to $37.9bn, producing a $15.5bn trade deficit. Continue reading »
WPI or CPI, or something new? Indian inflation is a complicated thing to follow.
The governor of the Reserve Bank of India, in a speech Tuesday, called for a new inflation index to be developed to supplement the Wholesale Price Index that the RBI mainly relies on to determine monetary policy and the recently revamped Consumer Price Index. Continue reading »
It’s better than expected, but that doesn’t mean it’s good enough – that was the consensus reaction to the Monday release of data that showed that India’s headline inflation fell to a 5-month low of 7.25 per cent in June, down from 7.55 per cent in May.
The headline figure does not look low enough to allow the Reserve Bank of India to cut interest rates at its meeting on July 31 – as many business people have been demanding. And in any case, for statistical reasons, the number might have to be revised up. Continue reading »
Headline inflation rose to 7.55 per cent year-on-year in May, up from 7.23 per cent in April, according to Indian government data released Thursday.
The high inflation figure is further bad news for the Indian economy, and may keep the Reserve Bank of India from cutting interest rates when it meets next week. Many have called for a rate cut after India’s GDP growth hit a 9-year low of 5.3 per cent in the quarter that ended in March.
Economists expect that the high inflation figure will cause the RBI to cut its cash reserve ratio for banks, though some say a 25bps interest rate cut is also not out of the question.
By Shubhada Rao of Yes Bank
After being the most aggressive central bank among emerging economies in 2011, the Reserve Bank of India has finally let down its guard and relaxed monetary policy after a hiatus of three years. In its annual policy review for 2012-13, the RBI delivered a greater-than-expected 50 basis points cut in the benchmark repo rate. Continue reading »
Indian inflation eased slightly to 6.89 per cent for March, down from 6.95 per cent for February and below market expectations, according to data released on Monday.
Will it be enough for a rate cut on Tuesday? Continue reading »