July 30: RBI Governor D. Subbarao explains the rationale behind the central bank’s liquidity tightening measures. “The idea was making liquidity scarcer and more costly, so modulating access to LAF was the most efficient way to curb rupee volatility,” he says. He also spoke about the impact on banks and the possibility of their raising rates.
July 30: RBI Governor D. Subbarao refuses to comment on the timing and kind of measures likely should the rupee worsen further. “We need to diagnose and prescribe dosage depending on the situation at hand,” he says. Subbarao also speaks about structural measures to contain instead of just financing the current account deficit.
July 30: While keeping repo rates and CRR unchanged, the RBI says it will withdraw tightening as rupee steadies. The central bank is worried about the macroeconomic situation, says Ajay Mahajan, Managing Partner at R-Square Advisors. “The need to help rupee shows RBI is in an ‘impossible trinity trilemma’,” he adds.
July 30: The RBI policy announcement spurred a market reversal as bonds yields rose, equity markets erased gains and rupee weakened. Axis Bank’s Saugata Bhattacharya says markets have taken into account future moves. Meanwhile, Tata Group’s Siddhartha Roy says, “If we cannot expect anything much from the future, it’s unlikely RBI will roll back its measures.”
July 30: As indicated by the Bloomberg poll, the Reserve Bank of India has kept rates unchanged in its policy meeting today. Axis Bank’s Saugata Bhattacharya says, “If the rupee stays at the same levels for a month there is a chance the RBI will roll back tightening.”
July 30: Retail investors have been shunning equities in favour of debt, says Arvind Sethi, MD & CEO at Tata Asset Management. “If credible measures don’t come out, people decide to hedge forward or hold back on dollar sales, it could worsen the problem,” he says, while adding that it’s best to stick with your asset allocations.
July 30: Arvind Sethi, MD & CEO at Tata Asset Management, says credible policies can change market sentiment, but this is doubtful with the upcoming elections. He talks about the surprising resilience in equity markets and although valuations are not cheap any longer, he advises on the best sectoral picks.
July 30: Tata Asset Management MD & CEO Arvind Sethi says there is a difference between just tightening liquidity and letting rates go up and actually validating that with a repo rate hike. RBI had cut rates too fast over the past few years and now it is reversing that stand, he says, adding that the central bank must increase its repo rates soon.
The FIPB have cleared the Jet-Etihad deal with riders. Etihad is now eligible to a 24% stake in Jet, along with powers to nominate candidates to the Board of Directors. Naresh Goyal remains the Chairman.