There has not been any precedence of major interest rate cuts, ahead of the union budget‘s presentation. On the contrary, major financial policy decisions are put on hold or deferred, ahead of the budget. R
"It is being questioned if the fall in borrowing costs will be a panacea for banks loan growth...a sustained up move lacks conviction," it said in a note.
CNBC-TV18‘s Shereen Bhan, quoting sources, say while there is plan to bring corporate taxes down to 25 percent level, focus this Budget will be on personal income tax.
The 10-year bond yield touched a fresh 7-year low of 6.3 percent today taking the cost of money for the government down by over one percent since April 1. Latha Venkatesh of CNBC-TV18 decodes the impact on the economy.
â€œThe fight against corruption will extend beyond demonetisation. However, the implications for the listed universe isn‘t too rosy, at least in the near term,â€ said Govindarajan Chellappa, Head of Research at Jefferies.
With banks turning stingy in passing on RBI's rate cuts to consumers, rate of home loans has fallen by only 0.26 percentage point since 2015, but corporates have managed to bring down their borrowing cost by 1.44 percentage point by tapping bond markets, as per the central bank.
Complaining that banks have passed benefits only in a "modest" measure to borrowers, Rajan said a pick-up in credit demand that shall follow the economic recovery and competition for corporate loans after the ongoing balance sheet clean-up by the state-run lenders, will ensure softer lending rates.
As the government homes in on a contender to replace outgoing Reserve Bank of India Governor Raghuram Rajan, there is a list of challenges that the new central bank chief will inherit. Here are the major ones.
Nomura expects domestic investors to take a backseat as well, at least until more clarity emerges from a continuity perspective.
The process of cleaning-up banks will continue as per the schedule irrespective of the Reserve Bank chief, says RK Bansal, Executive Director of IDBI Bank.
Credit Suisse the sudden departure raises uncertainty over the new monetary policy framework and managing potential volatility around events like NRI deposits redemption between September and November this year.
The Reserve Bank is unlikely to slash key policy rates until the end of this year as inflation shows no signs of moderating while the 7th Pay Commission hike may add to the rise in prices, says a Nomura report.
A number of banks, including ICICI Bank, Bank of India, IDBI Bank Friday joined their peers like SBI, HDFC Bank and Axis Bank to make a shift to lending rates based on marginal cost of funds.
Taimur Baig, Chief Economist, Asia Global Markets Research, Deutsche Bank AG says that while one rate hike is expected to be in the offing, more is unlikely to come.
Raghuram Rajan's term ends on September 3, 2016 and whether the outspoken Governor gets an extension, like his most of his predecessors, or not is something that will be keenly watched in the New Year.
Xavier Denis, Global Strategist at Societe Generale, says the new year will be a year of modest equity returns.
The MNI India Business Sentiment Indicator, a barometer of confidence among companies on the Bombay Stock Exchange, climbed to 62.3 in October from 61.4 in September, said MNI Indicators, which produces the survey.
Mark Mobius of Templeton Emerging Market Group says fears of global growth downgrade is unfounded.
According to the global financial services major, notwithstanding a far more politically stronger government, recovery in the Indian economy would be driven by global turnaround.
The deflationary trend continued for the 10th month in a row, with inflation plunging to a historic low of (-)4.95 percent in August on cheaper fuel and vegetables, putting pressure on RBI to cut interest rate.
The comments assume significance as RBI has been facing growing calls from the government and the industry for further rate cuts, although it has already lowered its policy rate thrice by 0.25 percent each so far in 2015.
The Reserve Bank is likely to keep interest rates on hold in the next month's monetary policy meet, but may slash the key lending rate by a 50-75 basis points by March 2016, Morgan Stanley on Thursday said.
In April, it had slashed base rate by 0.25 percent to 9.75 percent. SBI was the first of the block to reduce its base rate earlier this month after RBI Governor Raghuram Rajan in the June 2 monetary policy statement urged banks to pass through the sequence of rate cuts into lending rates.
Largest private sector lender ICICI Bank on Thursday marginally reduced its base rate to 9.70 percent from 9.75 percent earlier, making its lending rate at par with industry leader SBI and that of HDFC Bank.
Sunil Garg of JPMorgan says monsoon is clearly causing disappointments but the fact remains despite a few rate cuts since the beginning of the year, credit growth has not reponded.