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Chennai, With the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword>'s (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) Monetary Policy Committee (MPC) deciding to retain the repo rate at 6.5 per cent, economists are of the view that a rate cut may not happen any time soon or at least for next six months, said senior economists. In a 5:1 decision, the MPC which met on February 6-8, decided to hold the repo rate -- the rate at which the RBI lends to banks -- at 6.5 per cent. The RBI MPC also decided not to change its stance to 'neutral' from 'withdrawal of accommodation'. "It was no surprise that RBI MPC decided to keep the status quo on the interest rates for the sixth consecutive time. However, RBI continued to sound hawkish as against the market expectations and has not provided any indication of the timing of the change in monetary stance from withdrawal of accommodation," said <keyword id="20504468" type="General" weightage="20" keywordseo="suman-chowdhury" source="keywords">Suman Chowdhury</keyword>, Chief Economist and Head - Research, Acuite Ratings &amp; Research. "Given the tone of the MPC statement and the expectation of growth buoyancy, we believe that the likelihood of any rate cut by RBI has significantly reduced over the next six months," Chowdhury added. The RBI MPC will not cut the repo rate ahead of the US Federal Reserve, said Madhavi Arora, Lead Economist, Emkay Global Financial Services. "We understand that shifting debates on global narratives requires the RBI to be flexible as well. We have long maintained that the RBI's policy has been somewhat pegged to the Fed, specifically in the last two years, even as it formally targeted inflation. The swift turn of tone and action pivots of the RBI in the last two years have been influenced purely by global narrative. We do not see RBI preceding the Fed in rate cuts," Arora said. Predicting that RBI will remain cautious owing to high food inflation, CARE Ratings's Chief Economist Rajani Sinha said: "Healthy economic growth gives room to the Central Bank to maintain status quo for some more time." "However, in the second half of the year, as domestic inflationary concerns recede and the US Fed starts cutting rates, we can expect a shallow rate cut by RBI. On the liquidity front, RBI will continue to intervene through appropriate tools as required," Sinha said. <keyword id="20504469" type="General" weightage="20" keywordseo="sujan-hajra" source="keywords">Sujan Hajra</keyword>, Chief Economist &amp; Executive Director, Anand Rathi Shares and Stock Brokers, was also of view that rate cut may not happen any soon and RBI will be on wait and watch mode. "With RBI's inflation projection of 4.5% for FY25, any expectations of cuts coming in the current year become unlikely. We think the progress in food prices will be the key monitorable for RBI's tone in the upcoming policy. Like other central banks, higher growth for the current and next year gives RBI more headroom to be on a wait-and-watch mode," Hajra said. As to the 7% economic growth rate for FY25 stated by RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword>, Chowdhury said: "They have significantly upgraded their growth prospects for the next fiscal to 7.0%, reflecting that there are minimal concerns on economic growth at this time." "RBI's assessment on global growth also appears to be positive versus last year and it also believes that central banks are unlikely to resort to a pivot within a short period. Our outlook on the domestic growth prospects are moderate with a base forecast of 6.3% for FY25, given the visible weakness in the private consumption growth which is estimated at 4.4% in FY24 in the NSO estimates," Chowdhury said. "On the inflation front, the base forecast for headline CPI in FY25 is set at 4.5% which in our opinion has significant upside risks if the growth really maintains such a high level of momentum and if there are even moderate risks in the monsoon behavior," Chowdhury added.

RBI may not cut repo rate any soon or for six months: Economists

If things do not go substantially southwards for the closing days of 2022, Indian bellwether equity indices would end the year with a small gain. This will mark the seventh successive year of positive return. Sensex achieved this once during 1988-1994 and Nifty 50 never saw this, says <keyword id="166529" type="General" weightage="50" keywordseo="sujan-hajra" source="Orion">Sujan Hajra</keyword>, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers. "We expect positive equity return to continue during 2023," <keyword id="353796" type="General" weightage="80" keywordseo="hajra" source="Orion">Hajra</keyword> said. Valuation concern-led equity market correction looks unlikely in 2023. Indian mutual funds are receiving annualised $20 billion net SIP inflows. The rising trend remained unscathed despite market volatility. A substantial dip in SIP during 2023 looks unlikely. In each of the three episodes since 2000, when Indian equities registered a net outflow of FII money, the next couple of years witnessed large inflows. The current trends also suggest the possibility of substantial FII equity inflows in 2023, Hajra added. The combination of reasonable fundamentals and valuations coupled with the possibilities of large inflows suggest that equity returns in <keyword id="3658" type="General" weightage="50" keywordseo="india" source="Orion">India</keyword> would be positive in 2023. In view of global concerns, we expect the return to be in line with the long-term averages i.e., 10-13 per cent, Hajra said. Emkay Institutional Equities expects Nifty to attain a level of 19,500 by December 2023 given the current situation. Barring any major change in the global macro-economic and geo-political set-up, Sensex at 64,500 indicates a 7-8 per cent increase from the current levels. Largely, the increase in Nifty-50 profit after tax (PAT) in CY23 will be led by Banks, Auto OEMs and Ancillaries, Oil &amp; Gas, and IT companies. Sanjay Chawla, Head of Institutional Research, Emkay Global Financial Services said, higher-for-longer interest rates and a sudden rise in Brent crude oil prices are potential challenges for the market in the next 6-12 months. A capex-intensive budget by the government may spur investment; however global and domestic growth uncertainties may act as an impediment. Given the current scenario, we see Nifty-50 fair value of around 19,500 by the end CY23; we expect aggregate profit growth of Nifty-50 to be fairly resilient at around 15 per cent in CY23. ICICI Direct said in a note that India fared well both relatively and in absolute terms with respect to economic and stock market performance. "Going ahead, we believe H1CY23 may turn out to be volatile as investors around the globe would seek answers to key puzzles such as (1) How fast interest rate hikes come to a halt globally; (2) Damage to economic growth, more so in developed economies; (3) Lag effect of a rise in interest rates on demand cycle &amp; corporate EPS in India, etc," it added. "However, we believe such volatility will throw up attractive opportunities in domestic-oriented sectors like banks, capital goods, infrastructure and logistics, which will continue to be the beneficiaries of massive <keyword id="46930" type="General" weightage="80" keywordseo="capex" source="Orion">capex</keyword> spend by the government/private sector and recovery in margins/profitability. Apart from these, domestic sectors like retail, real estate, and auto ancillaries (domestic focused) will also provide good opportunities for the medium to long term," ICICI Direct stated. We also highlight the key risks for CY23 that may get manifested in the form of (a) any negative surprise from Covid erupting once again and (b) the continued hawkish stance of central banks, which may derail growth prospects, it said. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services said three major trends are emerging as the New Year approaches: (1) the impressive credit growth is sustaining; (2) capex is gaining momentum; (3) real estate is picking up. Therefore, financials, capital goods and construction-related stocks are well-positioned to outperform in 2023. In financials, the leading private sector banks have the potential to move up further and PSU banks are short-term trading plays. Axis Securities said in a note that Banking &amp; Financials will be major themes to watch out for in 2023 on account of their improved economic outlook and the pick-up in credit growth. Rural recovery is expected in 2023 led by moderation in inflation, softness in commodity prices, better farm income expectations, and higher government spending. Capital expenditure (especially railway Capex) and Infrastructure spending are likely to be overarching themes. Home improvement theme: With the pick-up in the real estate and housing demand, the home improvement theme has bolstered and would continue to be robust in 2023. The note said a rebound is expected in the <keyword id="6363818" type="General" weightage="50" keywordseo="pharma" source="Orion">Pharma</keyword> sector on account of new launches and gaining market share. High-quality retail play will continue to remain in focus. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/gold-silver-markets-most-likely-to-see-signs-of-exhaustion-in-2023/articleshow/96598428.cms">Gold &amp; silver markets most likely to see signs of exhaustion in 2023</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/indias-current-account-deficit-widens-to-4-4-of-gdp-in-q2-due-to-high-trade-deficit-rbi-data/articleshow/96599506.cms">India's current account deficit widens to 4.4% of GDP in Q2 due to high trade deficit: RBI data</a>

For 2nd time after 1988-94, Sensex on track for 7th successive year of gains

The <keyword id="19948184" type="General" weightage="100" keywordseo="Indian-economy" source="keywords">Indian economy</keyword> grew by 6.7 % in real terms in the April-June quarter of the current financial year 2024-25, the Ministry of Statistics and Programme Implementation's official data showed yesterday. Last year same quarter, India grew 8.2 %. The nominal GDP has witnessed a growth rate of 9.7% in the April-June quarter of 2024-25 as compared to the growth rate of 8.5% same quarter of last fiscal year. The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword>, in its latest <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword> meeting, projected <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> for 2024-25 at 7.2%, with growth for Q1 expected at 7.1%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%. India's GDP grew by an impressive 8.2% during the financial year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2% in 2022-23 and 8.7% in 2021-22, according to official data. Many global rating agencies and multilateral organizations have also revised their growth forecasts for India upwards. In July, the International Monetary Fund (IMF) raised India's growth projections for 2024 from 6.8% to 7 %, reinforcing the country's status as the fastest-growing economy among emerging markets and developing economies. The Economic Survey tabled in Parliament last month "conservatively" projected India's <keyword id="21013593" type="General" weightage="20" keywordseo="real-GDP-growth" source="keywords">real GDP growth</keyword> at 6.5-7% for 2024-25, acknowledging that market expectations are higher. Real GDP growth is the reported <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> adjusted for inflation. Soon after the GDP figures were released, Chief Economic Adviser V. Anantha Nageswaran told reporters at a virtual presentation that monsoon progress brightened the agriculture sector outlook, the services sector remained upbeat, and the external sector is stable despite headwinds. He asserted that election season in India, which somewhat slowed capital investment, had impacted the GDP figures. Inflation coming back under control and boosting consumption; and the increase in consumption as the overall share of GDP bodes well for the economy, he said. Here are some of the reactions from experts and economists on the GDP data: Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI Research: Now with 6.7 % growth in Q1, the new annual projection would be 7.1 %. We believe that GDP growth for FY25 will be a tad lower than the RBI's estimate and 7.0 % growth looks more reasonable. Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank: While the 1QFY25 GDP growth has come in softer than expectations, the GVA (gross value added) has remained firm, with non-farm growth holding up well. We retain our GDP growth expectations of 6.9 % in FY2025, aided largely by rural demand and government spending while watching closely the likely fatigue in urban demand, private capex, and pace of global slowdown. Raj Sinha, Chief Economist, CareEdge: For the full year FY25, we anticipate GDP growth to be 7 %, slightly below the RBI's projection of 7.2 %. In the subsequent quarters, the agricultural sector is expected to see improved growth due to a good monsoon, despite ongoing challenges pertaining to its distribution. An increase in the government's capital expenditure in the upcoming quarters and further pick-up in private capex will further support overall growth. Moreover, agri sector recovery and lower inflation will provide boost to consumption recovery in the coming quarters. Dharmakirti Joshi, Chief Economist, CRISIL: The low-base effect apart, improvement in agricultural growth, and lower food inflation will augur well for private consumption, particularly in rural areas. Higher agricultural growth will augment income and lower food inflation will improve discretionary spending ability. Net-net, we expect the economy to grow at 6.8 % GDP for this fiscal. Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers: Looking ahead, we anticipate full-year GDP growth for the current financial year to align closely with our estimate of 7 %. This robust growth, coupled with falling inflation, is expected to support continued outperformance in the Indian equity market. However, the strong growth figures may prompt the Reserve Bank of India (RBI) to maintain the current monetary policy rates throughout 2024. Dr DK Srivastava, Chief Policy Advisor, EY India, and Advisory Council to the 16th Finance Commission: In the first quarter data, there is a clear message that the GoI should accelerate its infrastructure spending to make up for the negative growth in its capital expenditure in the first four months... Unless this is made up and converted into a positive annual growth of 17 % or above, the likelihood is that the annual real GDP growth may fall below 7 %.

Indian economy relatively slowed in Q1-FY25, here's what experts have to say

<ul><li><keyword id="492629" type="General" weightage="20" keywordseo="fd-interest-rates" source="Orion">FD interest rates</keyword>, influenced by factors like the RBI’s policy repo rate, are likely to remain relatively high during the first half of 2024 </li><li>Broader, macroeconomic signs suggest that we may be approaching the end of this high interest rate cycle </li><li>People looking to park their money in FD for 2-3 years for their debt portfolio can use this opportunity to lock in their FD at current interest rate levels </li></ul>Last Friday, the Reserve Bank of India (RBI) kept the <a href="https://www.businessinsider.in/finance/news/rbis-mpc-keeps-rates-unchanged-to-be-actively-disinflationary/articleshow/109053104.cms">repo rates unchanged</a> seventh time in a row at 6.5%, as expected by industry experts. The last time it had raised rates was in February 2023, when it had raised the rates by 25 bps to 6.5%. This had pushed the rates on <keyword id="6377620" type="General" weightage="20" keywordseo="fixed-deposits" source="Orion">fixed deposits</keyword> to a high in about 5 years, which came as good news for those who invest in <keyword id="6568461" type="General" weightage="20" keywordseo="fds" source="Orion">FDs</keyword>. “FD <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword>, influenced by factors like the RBI’s policies such as the repo rate, are likely to remain stable when the repo rate is unchanged,” says Adhil Shetty, CEO, BankBazaar.com, a fintech portal. Co-operative banks would be offering an even higher rate of interest on FDs. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td colspan="5" style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank FD interest rates (%) </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">&lt;1 year </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">1-2 years </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">2-3 years </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">3-5 years </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank of Baroda </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.1 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.15 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.25 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">State Bank of India </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.1 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.75 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">UCO Bank </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">5.5 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.3 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.2 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Union Bank </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">5.75 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.25 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Bank </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.2 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.1 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.1 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Bank </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.25 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.15 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.2 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICICI Bank </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:top;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">6 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.2 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7 </td><td style="border-left:solid #000000 0.68181825pt;border-right:solid #000000 0.68181825pt;border-bottom:solid #000000 0.68181825pt;border-top:solid #000000 0.68181825pt;vertical-align:bottom;background-color:#ffffff;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">7 </td><td style="border-left:solid #000000 0.68181825pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td colspan="5" rowspan="3" style="border-top:solid #000000 0.68181825pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Data as on respective banks’ website on 05 Apr 2024; For each year range, the maximum offered interest rate is considered; interest rate is for a normal fixed deposit amount below ₹1 crore. Source: BankBazaar.com </td><td style="vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr></tbody></table> Should you lock your money in FDs? Retail inflation in recent months has eased down to 5% whereas RBI has kept the repo rate at 6.5%. “While there is some anticipation of rate cuts by the end of 2024, the RBI seems inclined to adopt a wait-and-see approach before initiating a rate cut cycle,” says Sujan Hajra, chief economist &amp; executive director at Anand Rathi Shares and Stock Brokers. But experts sense that a rate cut is coming soon. “It looks like we are at the end of the interest rate hike cycle unless inflation starts going up. So people looking to park their money in FD for 2-3 years for their debt portfolio can use this opportunity to lock in their FD at current interest rate levels,” says Abhishek Kumar, founder and chief investment advisor at SahajMoney, a financial planning firm. Agrees Shetty, “This stability benefits FD investors, especially those seeking predictable income streams, such as retirees and conservative investors prioritising capital preservation and regular earnings.” Once retail inflation stabilises or starts going down further in the coming months RBI is expected to start cutting repo rate. While it could be good news for the markets and may boost consumption further, it could also make banks reduce interest on FDs immediately after. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice.

Should you invest your money in an FD at high interest rates now?

<ul><li><keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>’s MPC keeps <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword> unchanged in the first policy of FY25.</li><li>Most experts had expected the RBI to maintain the status quo on interest rates.</li><li>A few, however, expected it to soften its hawkish forward guidance. </li></ul>The Indian central bank’s rate-setting panel, the <keyword id="6357126" type="General" weightage="20" keywordseo="monetary-policy" source="Orion">Monetary Policy</keyword> Committee (MPC), kept the repo rate unchanged at 6.5% on Friday. It remained focused on the withdrawal of accommodation in the first monetary policy of FY25. Both these decisions were taken with a majority of five to one. “Two years ago, around this time, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation. The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis,” said Shaktikanta Das, governor of the Reserve Bank of India. The second advance estimate (SAE) placed real GDP growth at 7.6% for the recently concluded FY24 — the third successive year of 7 per cent or higher growth. RBI projects FY25’s real GDP growth at 7%. “Robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4%. Under these circumstances, monetary policy must continue to be actively disinflationary to ensure anchoring of inflation expectations and fuller transmission of the past actions,” said Shaktikanta Das, governor of the Reserve Bank of India. His speech pointed out that uncertainties in food prices continue to pose challenges especially as temperatures are expected to be above normal. The MPC remains vigilant to the upside risks to inflation that might derail the path of disinflation. “Elephant moves slowly, and last mile inflation tends to be sticky,” said Das at the RBI press conference. RBI sees FY25’s consumer price inflation (CPI) inflation, assuming a normal monsoon, at 4.5%. The RBI had repeatedly insisted that it intends to bring down retail inflation below 4%. “It is essential, in the best interest of the economy, that CPI inflation continues to moderate and aligns with the target on a durable basis. Till this is achieved, our task remains unfinished,” said Das pointing to frequent incidences of supply chain shocks. He also added that the crude oil price movements in the last few days. GDP growth &amp; inflation projections by RBI for FY25 <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Time period </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Real GDP growth </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">CPI inflation </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q2 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.9% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.8% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q3 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q4 FY25 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.5% </td></tr></tbody><tbody></tbody></table> Hot inflation keeping RBI in wait-and-watch mode say economists This is the seventh consecutive policy review cycle where the MPC has chosen to keep the repo rate unchanged at 6.5%. Most experts have been expecting the RBI to maintain the status quo. Its current decision, most say, is a balanced approach towards growth while being vigilant over headline inflation. “This careful stance reflects concerns over potential inflationary pressures arising from volatile food prices, recent upticks in oil prices, and robust economic growth. While there was some anticipation of rate cuts by the end of 2024, the RBI seems inclined to adopt a wait-and-see approach before initiating a rate cut cycle,” says Sujan Hajra, chief economist &amp; executive director at Anand Rathi Shares and Stock Brokers. Volatile food inflation in the last few months has been worrying economists. The ongoing heatwave combined with the persistent El Niño impact brings back worries about cereal and pulse price hikes. While the wheat crop has by and large been harvested, vegetable prices also pose an additional worry. The Indian Meteorological Department (IMD) has predicted higher-than-normal maximum temperatures across the country this summer. While core inflation has been softening, in the last few days, crude oil prices have inched up to cross $90 per barrel. "The monetary policy stance announced today reflects that the RBI is evenly balancing the two divergent objectives of growth and inflation. It seems a case of full commitment to growth with an even higher commitment to inflation targets. I hope we will see sustained growth and softened inflation,” Anu Aggarwal, president &amp; head of corporate banking, Kotak Mahindra Bank. The RBI governor’s stance on bringing down inflation has made economists delay their rate cut expectations as far as Q3 of FY25. The Bank of Japan has recently ended its negative interest rate policy and the US Fed has also delayed its much anticipated easing cycle. Most economists believe that RBI policy is pegged to the Fed, especially in the last two years, even as it formally targeted inflation. “External dynamics have been fluid, implying that the policy prerogative needs to be flexible for ensuring financial stability. We maintain the RBI’s tone will slowly tiptoe to ‘Gracklish’ from the usual ‘Hawk-Dove’ signaling, implying a non-committal stance and limited definite forward guidance ahead,” said Madhavi Arora, lead economist, Emkay Global Financial Services.

We want the elephant of inflation to walk back to the forest: Shaktikanta Das

India a long-term investment destination even among G-20 countries

<keyword id="1397102" type="General" weightage="20" keywordseo="Public-sector-bank-stocks" source="Orion">Public sector bank stocks</keyword> have rallied more than 25 per cent post their stellar Q2 financial results with net profit jumping by 50 per cent. Union Bank of India stock price is up by 60.8 per cent over the last month among the PSU bank stocks. Bank of India is up by 56.1 per cent during the month while UCO Bank is up by 32.4 per cent. The Nifty PSU Bank index made a new 52-week high on Friday. The index was up by 21.35 per cent last month. Amber Pabreja, Founder and CEO of Trendlyne, said the Nifty PSU Bank index has rallied more than 25 per cent after public sector banks delivered strong Q2 results - a sign of investor confidence. Loan growth has jumped by double digits. "We should keep in mind, however, that interest rates are on the rise, and deposits are growing relatively slowly. This means more expensive loans and lower net interest margin growth in the coming quarters. It will be a riskier environment for the banks," he said. "Overall, PSU banks will need to keep a close eye on their asset quality, especially as we head into FY24. And investors will have to become more selective with their picks. I expect major banks to stay resilient. State Bank of India (SBI), for example, reported a net NPA ratio of less than 1 per cent (.8 per cent for September 2022 quarter), and its earnings are expected to grow by 33 per cent in FY23 as per Trendlyne's consensus estimates," Pabreja said. S&amp;P Global Market Intelligence said in a report that Indian banks will gain from tailwind of rising rates as credit growth stays steady. Rising interest rates will continue to help Indian banks in the rest of the fiscal year ending March 31, 2023, after high credit growth and stronger margins helped propel earnings. Five of the six biggest banks by assets in India reported an increase in net income for the fiscal second quarter ended September 30, the report said. Vinod Nair, Head of Research at Geojit Financial Services, said, "The rally of PSBs was triggered by the strong earnings growth announced in Q2 results. It provided a good set of number with high provision coverage and improvements in asset quality. Combined net profit of 12 PSBs is up by 50 per cent on a Y-o-Y basis to Rs 25,685 crore. " Nair said the upgrade in outlook demanded improvement in valuation. There was a strong arbitrage opportunity due to heavy disparity between the valuation of private and public sector banks. However, due to sharp rally, P/B ratio has increased to 0.9x from 0.5x, narrowing the valuation gaps and limiting the performance on a short to medium-term. Banks took advantage of the higher interest rate environment to bolster their net interest margins, while previous efforts to reduce their nonperforming assets resulted in lesser loan loss provisions, their recently released earnings reports showed, S&amp;P Global Market Intelligence said. The second quarter results of private sector, as well as public sector banks, were "picture perfect", said Tusharika Aggarwal, research analyst, Asia-Pacific dividend forecasting at S&amp;P Global Market Intelligence. "I remain fairly confident in the banks' earnings for rest of the year. The interest rate hikes, although the quantum will decline, would still benefit Indian banks. And because credit growth is increasing, so despite high-interest rates, net interest income will grow," Aggarwal said. While lending rates have increased on aggregate with growing demand, interest rates offered to depositors have risen more slowly, Aggarwal said, adding that the gap, along with lower credit loss provisions, has resulted in better return on assets for banks. Ajit Kabi, Banking Analyst at LKP Securities, said, "The outperformance of public banks was evident as the fundamentals are getting stronger. The recapitalisation had improved the capital requirement which led the banks to grow the balance sheet. The credit growth reported was the highest in the decade. The deposit growth was also above the market growth rate. The large public banks (SBI, BoB, Canara Bank) have gained market share." On the asset quality front, the GNPA/NNPA level reduced significantly with ample provision buffers. The contingent provision for the bank seems adequate and above regulatory requirements against the restructured pool. The outperformance across yardsticks and inexpensive valuation has driven the rally in recent times. The rally is likely to continue for public banks as their balance sheet is at a sweet spot to grow with minimum asset quality hiccups, Kabi said. S&amp;P Global Market Intelligence said bank credit growth picked up for both public and private sector banks in the first half of fiscal 2022-2023, according to Reserve Bank of India data released in September. Private sector banks' credit growth for the fiscal first half came to 20.4 per cent, compared to 13.9 per cent for public sector banks. The central bank expects gross domestic product growth at 7 per cent in the current fiscal year ending March 31, 2023, and to ease to 6.5 per cent in the next fiscal year, dampened by further monetary tightening in the central bank's fight to control inflation. Manoj Kumar Dalmia, Founder and Director, Proficient Equities, said PSU bank stocks have been in a rally recently pertaining to good quarters and increased credit uptakes due to festive demand. The banks are also poised well, having improved asset quality. Despite the rally, many PSU banks are available at a reasonable valuation ranging from 0.5-1.0 Price/BV and investors can accumulate them with a long-term perspective. Some PSU banks to look for could be Canara Bank and Union Bank of India. Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers, said, "With robust credit growth, improving net interest margin (typical during the early phase of a rate hiking cycle), adequate coverage ratios, and no major signs of asset quality deterioration, we are fundamentally positive on the banking sector. "However, with the overstretched credit-to-deposit ratio, either the credit growth rate or the net interest margin of the private sector banks are likely to deteriorate. With very significant excess investment in government securities over statutory requirements, public sector banks are better off which explains the recent strong rally." After a sharp fall in deposit and credit shares to private banks, there are signs that PSUs may get back a part of it. There has been relative improvements in the return ratios as well. Meanwhile, large valuation differences continue. These factors also seem to be driving the rally, he added. S&amp;P Global Market Intelligence said the key surprise in banks' fiscal second quarter results was a 25-basis-point quarter-over-quarter expansion in NIM. It added, however, that even as this trend is working favourably now, it will increase the procyclical nature of earnings and will be a concern later when rates begin declining. Most banks reported faster credit growth as they ride on rising demand for loans. However, deposit growth is lagging and may push up funding costs later, Nikita Anand, associate director at S&amp;P Global Ratings, said. "We note that deposit growth is lagging credit growth, leading to higher loans-to-deposit ratios, which is positive for margins. However, with higher term deposit rates, there is likely to be some movement of funds from savings deposits to terms deposits. This could lead to some rise in cost of funds," Anand said. Some bank chiefs said they have started looking at ways to keep NIMs intact. Dinesh Khara, chairman of State Bank of India, said the bank will continue to open more savings bank accounts to attract low-cost funds and offer remunerative rates on term deposits to customers. "We are very mindful in terms of increasing our interest rates on the term deposits. So, I think, hopefully our effort will be to sustain the NIM," Khara said during the bank's November 5 earnings call. State Bank of India reported a rise in fiscal second-quarter net profit to Rs 147.52 billion from Rs 88.89 billion, while Bank of Baroda's net profit for the period rose 56.8 per cent year-over-year to Rs 34 billion from Rs 21.68 billion. Punjab National Bank, however, reported that its net profit for the quarter fell 55.3 per cent to Rs 4.94 billion as the state-run lender increased provisions for nonperforming assets by 30.9 per cent year-over-year to Rs 35.33 billion. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-nifty50-post-negative-returns-this-week-as-autos-drag-psu-banks-surge/articleshow/95607400.cms" style="">Sensex, Nifty50 post negative returns this week as autos drag – PSU banks surge</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/three-out-of-seven-companies-out-from-trillion-dollar-club/slidelist/95607217.cms">Three out of seven companies out from trillion dollar club</a>

PSB stocks on 52-week high riding on record profits, double-digit loan growth

Budget overhang is likely to dominate trading pattern in the equity market this week, while participants will also keenly watch other developments like RBI policy, release of key macro data and quarterly earnings, according to analysts.
 Giving a thumbs down to the Budget, the market benchmark Sensex logged its biggest single-day plunge in more than a decade on Saturday after Budget presentation.
 Analysts said investors were disappointed as the Budget failed to live up to market expectations of growth-boosting measures and fiscal discipline.
 "The lack of major growth boosting measures in itself is negative for the equity market. The new income tax regime would also be negative for tax exempt equity savings schemes," Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares &amp; Stock Brokers said.
 Finance Minister Nirmala Sitharaman on Saturday slashed income tax for individuals, abolished dividend tax for companies and announced some measures for agriculture and infrastructure sectors.
 "Recasting of dividend taxation norms also seem to be on the balance negative for most domestic equity investors. Overall, the budget seems to be negative for the equity market," Hajra said.
 Further, income tax slab rejigs also stoked fears of declining inflows in tax-saving investment avenues. 
 "Income tax changes announced has come with riders of giving up exemptions which disappointed the markets, with insurance sector being impacted the most," Geojit Financial Services Ltd Head of Research Vinod Nair said.
 He further said that the flexibility shown in FY20 fiscal deficit is positive, but extending the same to FY21 would have provided more confidence to the market. 
 "Since the event is over, the focus will now turn to ongoing Q3 announcements and how global events unfolds in the near term," Nair added.
 The Reserve Bank will on Thursday announce its first bi-monthly monetary policy post-Budget. 
 PMI data for manufacturing and services sector are also due this week. 
 On corporate earnings front, Bharti Airtel, Lupin, Sun Pharma and Mahindra &amp; Mahindra are among the major companies scheduled to declare their October-December results this week.
 Concerns related to coronavirus may also dictate sentiments in the global as well as domestic market.
 On Budget day, the <keyword id="53232" type="COMPANY" weightage="20" keywordseo="BSE-sensex">BSE Sensex</keyword> ended 987.96 points, or 2.43 per cent lower, at 39,735.53. Over the last week, it plummeted 1,877.66 points to close below the key 40,000-mark. SUM RVK See Also: <a href="https://www.businessinsider.in/personal-finance/news/you-will-now-have-to-pay-14-5-tax-on-dividend-received-on-lic-policy/articleshow/73887794.cms?src=hp_ts">You will now have to pay 14.5% tax on dividend received on LIC policy</a>

Watch out for RBI policy review and earnings from Airtel, Lupin, Sun Pharma and M&M this week

New Delhi, Feb 1 () Investor wealth plummeted by Rs 3.46 lakh crore on Saturday as equity markets came crashing after the Union Budget for 2020-21 failed to live up to expectations.
 The massive sell-off in equity market wiped out investor wealth, which fell by Rs 3,46,256.76 crore to Rs 1,53,04,724.97 crore on the BSE.
 Market capitalisation of BSE-listed firms plunged as BSE Sensex plummeted 987.96 points to close below the key 40,000-mark. It closed at 39,735.53.
 This was the benchmark's biggest drop since October 24, 2008, when it had plummeted 1,070.63 points, and the fourth biggest fall overall.
 "The lack of major growth boosting measures in itself is negative for the equity market. The new income tax regime would also be negative for tax exempt equity savings schemes. Recasting of dividend taxation norms also seem to be on the balance negative for most domestic equity investors. Overall, the budget seems to be negative for the equity market," Anand Rathi Shares &amp; Stock Brokers Chief Economist and Executive Director Sujan Hajra said.
 Motilal Oswal Financial Services Managing Director &amp; CEO Motilal Oswal said, "Markets have taken a cautious view on the Budget, the tax rate cut and DDT (Dividend Distribution Tax) benefit will help economy to grow and corporate payouts to increase. At these levels one should buy for long term."
 The government on Saturday proposed to remove DDT on companies, and henceforth the tax will be shifted to recipients at the applicable rate.
 Currently, companies are required to pay DDT on the dividend paid to shareholders at the rate of 15 per cent plus applicable surcharge and cess, in addition to the tax payable by the company on its profits.
 "The budget is good on intent. However, the key is efficient execution in a time-bound manner. There are many positives to simplify things and encourage entrepreneurs but again, key will be execution in a time-bound manner. Intent needs to be converted into implementation," Nilesh Shah, MD &amp; CEO, Kotak Mahindra Asset Management Company said.
 The finance minister said that improvement in revenue generation gives hopes of lowering fiscal deficit to 3.5 per cent of GDP in the next fiscal from 3.8 per cent in the current.
 From the 30-share pack on BSE, 24 companies suffered losses, led by ITC, Larsen &amp; Toubro, HDFC and State Bank of India.
 According to Krishna Kumar Karwa, Managing Director - Emkay Global Financial Services, investors are disappointed with no relief on long term capital gains (LTCG) tax and lack of big bang sectoral stimulus.
 "The removal of Dividend Distribution Tax seen as a continuation of earlier step of reducing corporate tax is well appreciated and sends the right signals to local and global investors," he added.
 At the BSE, 1,724 scrips declined, while 611 advanced and 126 remained unchanged.
 In the broader market, the BSE SmallCap index fell 2.20 per cent, while BSE MidCap index declined 2.21 per cent.
 "The markets have reacted negatively to the Budget, mainly due to some disappointments on account of non-abolition of LTCG, confusion about the impact of DDT removal and taxing dividends in the hands of recipients. Also the alternative provided to individuals for lower rate of tax, provided they do not claim exemptions/deductions, did not seem too attractive," HDFC Securities MD &amp; CEO Dhiraj Relli said.
 "The alternative tax system discourages investments which market participants do not seem to be comfortable with. The overhang of coronavirus outbreak on our markets also got magnified in the later half of the session. Foreign investors will look for signs of revival of growth before they commit funds," he said. SUM 
RVK

Investor wealth erodes by Rs 3.46 lakh cr as mkts plummet after Budget announcement

Mumbai, Feb 1 () The Sensex logged its biggest single-day plunge in more than a decade on Saturday after the Union Budget failed to live up to market expectations of growth-boosting measures and fiscal discipline.
 The benchmarks, which started on a shaky note, tanked soon after Finance Minister Nirmala Sitharaman pegged the fiscal deficit at 3.8 per cent for the current fiscal, compared to the earlier target of 3.3 per cent of GDP.
 Presenting the Union Budget for 2020-21 in Parliament, Sitharaman also proposed lower income tax slabs for those foregoing various exemptions, and removed dividend distribution tax on companies, effectively shifting the tax burden to the recipients.
 Nosediving nearly 1,275 points from the day's high, the 30-share BSE Sensex ended 987.96 points or 2.43 per cent lower at 39,735.53.
 This was the benchmark's biggest drop since October 24, 2008, when it had plummeted 1,070.63 points, and the fourth biggest fall overall.
 On similar lines, the 50-share NSE Nifty plunged 300.25 points or 2.51 per cent to close at 11,661.85.
 Investor wealth, measured in terms of value of all listed shares on BSE, plunged by Rs 3,46,256.76 crore to reach Rs 1,53,04,724.97 crore.
 Since the last Budget presentation in July 2019, the Sensex has gained 222.14 points or 0.56 per cent, while the Nifty slumped 149.30 points or 1.26 per cent.
 Analysts said income tax slab rejigs stoked fears of declining inflows in tax-saving investment avenues, while the proposed transfer of dividend distribution tax to investors added to the negative sentiment.
 "The lack of major growth boosting measures in itself is negative for the equity market. The new income tax regime would also be negative for tax exempt equity savings schemes. Recasting of dividend taxation norms also seem to be on the balance negative for most domestic equity investors. Overall, the budget seem to be negative for the equity market," said Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares &amp; Stock Brokers.
 ITC was the top laggard in the Sensex pack, tanking 6.97 per cent, after the Budget hiked the excise duty on cigarettes.
 L&amp;T, HDFC, SBI, ONGC, ICICI Bank and IndusInd Bank also lost up to 5.98 per cent.
 On the other hand, TCS rallied 4.13 per cent, followed by HUL, Nestle India, Tech Mahindra and Infosys.
 In her second Budget presentation, the finance minister said certain government securities will be open for foreign investors, adding that the Centre plans to increase investment limit for FPIs in corporate bonds from 9 per cent to 15 per cent.
 Abhinav Gupta, President, Capital Market, Share India Securities, said, "We are extremely disappointed with budget. No significant announcement for industry or consumers. Name sake changes in income tax slabs only to create political mileage that may not lead to any significant changes in growth prospects in near term.
 "The FM could have made several key initiatives to spur investment and domestic consumption to address the pain points of the economy. While this budget could have focused on capital creation for nationals as well."
 Sectorally, BSE realty index plunged 7.82 per cent, followed by capital goods, industrials, finance, bankex and metal.
 IT and teck ended with gains of up to 1.41 per cent.
 "DDT removal is good as it increases dividends received in the hands of the taxpayer. However, such receipts now are taxable in their hands. Those above 20 per cent tax slab will now face more tax on their dividend income," said Archit Gupta, Founder, and CEO, ClearTax. ANS ABM
ABM

Budget blow for D-St: Sensex sinks 988 pts; Rs 3.46 lakh cr investor wealth wiped off

India just became the ninth largest equity market in the world as the stock <keyword id="118864" type="UNKNOWN" weightage="20" keywordseo="Market-capitalisation">market capitalisation</keyword> (M-cap) crossed $2 trillion. This was due to the relentless buying by local and offshore investors. As per the Bloomberg data, the increase in stock prices has pushed up India's M-cap-to-GDP ratio, a tool used by equity strategists to assess the relative valuation of a market, well above the 10-year average. "India has the largest number of listed companies in the world. Interestingly, nearly 50 per cent of the actively traded companies have M-cap of less than Rs 500 crore. This suggests that Indian companies go public much earlier than in most other large economies. The relatively high Mcap-to-GDP ratio in India, therefore, is reflective of strong appetite of Indian entrepreneurs to access public equity funding and the willingness of Indian equity investors to fund such entrepreneurs,” Sujan Hajra, chief economist at brokerage Anand Rathi, told ET. For India, the ratio had peaked at 1.48 in 2007. "India can see further expansion in the M-cap-to-GDP ratio as private and government capex kicks in. The possibility of rating upgrade by the year-end could push up the ratio further. It can reach 1.1 to 1.2,” A. Balasubramanian, CEO, Birla Sun Life Mutual Fund, told ET. India's contribution to global M-cap has risen to a six-year high of 2.7 per cent against a six-year average of 2.2 per cent .

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