While improving external demand conditions will support economy, significant global political risks remain, the RBI Monetary Policy Committee said.
Actually the withdrawal of legal tender characteristic does not extinguish any of the RBI's balance sheets, and therefore is no implication on the balance sheet as of now, Patel said at a media briefing post the credit policy
The central bank sees near term downside risks travelling through two major channels: (a) disruptions in economic activity in cash-intensive sectors such as retail trade, hotels & restaurants and transportation, and in the unorganised sector; (b) contraction in aggregate demand because of the 'wealth effect'.
Reserve Bank Governor Raghuram Rajan kept key rates unchanged at his last policy review before he bids adieu early September.
Rajat Bose of rajatkbose.com is of the view that SBI may test Rs 160 while Bank of Baroda may hit Rs 110-111.
Leading indicators of services sector activity are emitting mixed signals.Slowdown in tourist arrivals, railway traffic and international air passenger and freight traffic could affect hotels, restaurants and transport firms
A CNBC-TV18 poll showed that 70 percent of the bankers, bond dealers and economists expect a 25 basis-point repo rate cut while SLR and CRR rates are expected to be kept unchanged.
CARE Ratings expects RBI to reduce the repo rate by 25 bps in the post budget policy, provided the inflation numbers for January have moved in downward direction. Based on ceteris paribus conditions we still expect rates to be cut by another 75 bps this calendar year, says the report.
Global cues, meanwhile, are positive with the US markets rallying with the Dow rising 200 points on encouraging news from the eurozone and stronger oil prices.
The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.6 percent and 1.1 percent, respectively.
R Venkatraman, MD, IIFL believes that weak earnings were already factored in by the market and expects 2015 also to be a good year as 2014 but says one should not expect 30-40 percent returns.
Bajaj Auto, Mahindra & Mahindra, HDFC Bank, Gail India, Infosys, BPCL, DLF and Asian Paints were under pressure in early trade, down 0.7-2 percent.
According to Bank of America Merrill Lynch, the RBI is likely to cut policy rates by 75-100bp starting early 2015 even if Fed chair Janet Yellen hikes from September 2015.
Since being appointed governor in September, Raghuram Rajan had embarked on a series of rate hikes to tame soaring prices -- cementing the central bank's hawkish stance.
In an interview to CNBC-TV18, Samiran Chakrabarty, head of research of Standard Chartered Bank spoke about his reading of the current economic environment in the country and his outlook.
In an interview to CNBC-TV18, Ananth Narayan of Standard Chartered Bank gave his outlook on the economy and the currency market.
In an interview to CNBC-TV18, Ashok Wadhwa, Group CEO of Ambit Holdings spoke about his reading of the latest RBI credit policy and the road ahead for the Indain economy.
Most experts believe that given the risk of further depreciation in rupee the central bank would avoid cutting repo rate in June, but may provide a cash reserve ratio cut of 25 basis points to improve liquidity.
Evening bulletin brings to you all the key events that made headlines today:
The Nifty was trading flat in the afternoon trade as traders cited cautious stance ahead of the RBI credit policy on May 3. The uncertainty on the political front was also keeping traders in check. The market will remain shut on Wednesday.
RBI credit policy is one of the most talked about events in the stock market. Whenever credit policy announcement approaches, market becomes agog with the shape that the policy announcements will provide to the economy in general and market in particular.
The RBI has acted according to the expectation of the market. But still we saw Rupee and Sensex turning around on the back of hawkish comments made by the RBI.
The 25 basis point repo rate cut announced by RBI has come as a relief to the borrowers both existing as well the potential borrowers.
RBI delivered to expectation on policy rates, and not delivering CRR cut is not relevant to markets with option to release liquidity through Bond/USD purchases.
The main reason why markets and finance ministry are clamouring for the RBI to cut policy rate is the assumption that the move will automatically lead to banks lowering their lending rates.