01 August, 2014 11:14 IST
News
Expect interest rates to remain range-bound with a softening bias: IDBI MF
Source: IRIS (19-NOV-12)
Comments  |  Post Comment

After improved sentiments in September, October saw global outlook worsen again. Growth momentum visibly spluttered in China, as the imminent decadal leadership change kept all eyes towards the fastest growing nation. The European debacle dragged on without any visible near-term solution, and concerns on the 'fiscal cliff' and uncertainty of the impending presidential elections put US recovery in doubt.

''Domestically, the month was quite uneventful in terms of 'headlines' but North Block is said to have been actively engaging in constructive dialogue for resolution of various structural issues like environmental clearances, land acquisition bill, banking amendments, retrospective taxation etc. At the same time, the ruling party has also begun preparations for the elections in either 2014 or earlier, by effecting a cabinet shuffle involving key ministerial posts like petroleum & natural gas, law, railways, external affairs etc,'' said IDBI Mutual Fund.

CPI fell to 9.73% from 10.03% due to base effect, while WPI rose to 7.81% from 7.55%, with core inflation momentum strengthening on the back of fuel price hikes. However, global slowdown, especially in China, is expected to provide some respite in the form of fall in price of crude and other commodities.

Systemic liquidity tightened as Government balance with RBI increased post-advance tax in mid-September. However, limited supply of Certificates of Deposit kept money market rates steady at subdued levels while credit spreads narrowed. Banks' credit off -take from industry picked up, but still remained below trend. Banks' thrust on retail assets has been evident in the sectoral credit data, with retail loans (especially housing) accounting for nearly half of the incremental credit in FY13. Rupee/USD depreciated again on the back of rising risk aversion, closing the month at 53.8/USD. Crude prices remained range-bound due to concerns on global growth.

The much-awaited monetary policy also disappointed market participants who broadly expected stimulus in the form of a policy rate cut. RBI, however, continued its anti-inflationary stance and only cut CRR by 25 bps taking it to a record low of 4.25%. However, unlike last time, when major banks had complied with a base rate cut in response to a CRR cut, banks this time sounded doubtful. More importantly, RBI effectively indicated that a rate cut seems unlikely until Jan 2013.

''Going forward, we expect interest rates to remain range-bound with a softening bias in the medium-to-long term,'' IDBI Mutual Fund added.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


Live News
Sensex falls 139 points; capital goods, power drag - 01-Aug-2014 11:02
Rupee declines 26 paise against dollar to 60.82 - 01-Aug-2014 10:19
Atul Auto sales rise 17.7% in July`14 - 01-Aug-2014 09:48
TechM falls on weak Q1 earnings - 01-Aug-2014 09:36
Sensex falls 164 points in early trade; M&M, GAIL, HDFC drag - 01-Aug-2014 09:26
Petrol price cut by Rs 1.09/litre, diesel up by 50 paise - 01-Aug-2014 09:17
Market likely to trade in range between 7,730-7,745 in upper side: Indira Sec - 01-Aug-2014 09:06
Markets likely to open lower: ICICIdirect - 01-Aug-2014 09:03
Trend deciding level for day is 26,956/7,741: Angel Broking - 01-Aug-2014 08:52
Indian ADRs lower; Dr Reddy, MTNL drag - 01-Aug-2014 08:44
India stock index futures signal negative open - 01-Aug-2014 08:40
more...
* Q - Quote , N - News , C - Chart , F - Financials
Comments Post comment 
 Post Comment
Name Email
Comment
Security Code type   bzqshk into this box
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Forums  |   E-mail  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer