Reserve Bank head Raghuram Rajan went with the recommendations of majority of the external members of the monetary policy panel and did not slash the key interest rate early this month, reported PTI.
As per the summary of electronic consultation with the Technical Advisory Committee (TAC) released by RBI, three of the five external members recommended no change in policy rates.
Before contemplating any easing of policy rate, these members wanted to see substantially lower inflation relative to the 2016-17 target of 5 per cent on a durable basis and assess the effect of the monsoon in the next couple of months.
They also wanted further clarity on the US Fed’s take on the rates.
Meanwhile, in a sweeping change, the government yesterday enforced a law for setting up a broad-based, six-member committee that is likely to decide on interest rate at the next monetary policy in August, with RBI Governor having a casting vote in case of a tie.
The review will be the last monetary policy of Rajan, who completes his three-year term on September 4.
The summary further said that the other two members recommended a policy repo rate reduction of 25 basis points.
According to them, the shortfall of demand in the economy calls for some stimulus and the effect of the predicted good monsoon would keep food prices under check. They also opined that there is a window of opportunity before a possible the Fed rate hike in mid-June.
One of these two members was of the view that, given the fragmentation and incompleteness of India’s financial markets, the repo rate has proved to be a much less effective instrument of monetary policy than in well developed markets like in the US, the summary said.
Consultation with external members of the TAC was held electronically during May 24-30, in the run up to the Second Bi-monthly Monetary Policy Review of the fiscal 2016-17.
On June 7, Rajan kept the key policy rate unchanged citing higher upside risks to ‘inflation trajectory’ but said the central bank will remain accommodative provided data are supportive.
All the five external members — Shankar Acharya, Arvind Virmani, Errol D’Souza, Ashima Goyal, and Chetan Ghate — sent their feedback through e-mail.
Members noted that global economy recovery is struggling to gain momentum.
On domestic economic growth, the sustained weakness of industrial production continues to be a source of concern, and a drag on overall activity. Low capacity utilization numbers suggest that some sectors of the economy are operating below potential.
Most of the members expressed concern on inflation outlook since food inflation rose by 100 basis points, headline inflation moved up by 60 basis points, and even excluding food, fuel, petrol and diesel, inflation edged up marginally and remained sticky in April.
It will further file for overseas listing by April 2017.
The exchange, which has been pitching hard for either self-listing or direct supervision by Sebi and not by a rival exchange, said in a statement that its board of directors “has expressed desire to file the draft red herring prospectus latest by January 2017, after addressing restructuring needs and regulatory requirements for listing”.
“The board also advised the NSE management to file for overseas listing by April 2017,” the exchange said.
“Further, to accelerate the listing procedures, the board has re-constituted the current listing committee as an empowered sub-committee of the board,” NSE said.
“The said committee will take decisions within a stipulated timeline.”
The decisions related to listing were taken during the last meeting of the board of directors on June 23, 2016.
NSE has been facing intense pressure from its shareholders to go public and had formed a listing committee to expedite the listing process and seek support for self-listing. The exchange has reportedly approached the government and Sebi to bring in norms for self-listing.
Regulations of the Securities and Exchange Board of India (Sebi) do not provide for self-listing of a stock exchange and the market watchdog has so far said no to considering the matter.
Meanwhile, NSE is also looking into restructuring its business wherein it plans to create a separate entity for non-regulated portfolio.
The exchange’s closest competitor, BSE, has already begun its IPO process and is likely to file papers with Sebi soon.
This is on top of 17 SMEs that already got listed in this year.
“The IPO pipeline is good, which shows that confidence among the companies. We are expecting 30 SME IPOs in the next three months,” BSE MD and CEO Ashishkumar Chauhan said, quoted PTI.
He was speaking on the sidelines of a seminar on ‘Is the corporate sector over-regulated?’, organised by an industry body.
Listing will help these companies enter and finally to graduate on to the mainboard.
These companies belong to a wide range of sectors, like logistics services, media, automotive components, infrastructure and hospitality, among others.
BSE had launched SME platforms in March 2012 to provide opportunity to such firms to raise capital for growth and expansion. Since then a total of 136 companies got listed on its SME segment and 18 of these firms have migrated to the main board platform.
According to Bank of America Merrill Lynch (BofA-ML), its inflation indicator is tracking March CPI inflation at 5 per cent, slightly lower than February’s 5.2 per cent.
Commenting on the issue, a BofA-ML Official told the media, “We continue to expect the RBI to cut rates 25 bps on April 5 and in August.”
The declining inflation and negative industrial outlook have strengthened the case for RBI cutting interest rate in its first bi-monthly monetary policy for 2016-17 on April 5.
RBI Governor Raghuram Rajan on February 2, left the key interest rate unchanged citing inflation risks and growth concerns.
However, they pulled out Rs 1,027 crore from the debt markets during the period under review.
Foreign Portfolio Investors (FPIs) have turned net buyers of equities in March after pulling out a massive Rs 16,648 crore from the market in the previous two months.
Inflows accelerated on expectations that Reserve Bank would reciprocate to the government’s commitment to fiscal prudence with a rate cut sooner than later, market analysts said.
In addition, a sign of recovery in global market has raised optimism among market participants, they added.
According to the data available with depositories, FPIs invested Rs 11,166 crore in equities during March 1-18, while Rs 1,026 crore was withdrawn from the debt market in the same period, leading to a net inflow of Rs 10,140 crore (USD 1.5 billion).
Prior to that, FPIs had pulled out Rs 11,126 crore from equities in January and Rs 5,521 crore in February on account of continuous fall in crude prices and fears of a global slowdown.
The company has fixed the price band at Rs 360-432 per equity share for the IPO. The initial share-sale programme will conclude on March 23.
According to the Draft Red Herring Prospectus, Gujarat-based Infibeam plans to come out with public issue of equity shares worth up to Rs 450 crore.
The issue is being managed by SBI Capital Markets and Elara Capital India.
As per reports, the initiative aims at promoting India as an important investment destination and a global hub for manufacturing, design and innovation.
Commenting on the issue, Commerce and Industry Minister Nirmala Sitharaman told the media, “FDI inflow has increased 29 per cent during October 2014 to December 2015 (15 months after ‘Make in India’) compared to the 15 months period prior to the launch of this initiative.”
“During April-January 2016, the government has received 424 FDI proposals. Out these, 285 proposals have been disposed of,” he added.
The Minister further added that foreign investment in business to customer (B2C) e-commerce activities had been “opened in a calibrated manner” and entity was permitted to undertake retail trading through e-commerce under certain circumstances.
The GSM subscriber base stood at 76.14 crore in January, Cellular Operators Association of India (COAI) said.
Bharti Airtel led the pack with maximum subscribers joining its network in the reported period. The company added 29 lakh customers to take its total user base to 24.86 crore with 32.35 per cent market share at the end of February.
Vodafone, the country’s second largest mobile operator, added 20.34 lakh subscribers to take its overall base to 19.67 crore with 25.59 per cent market share, reported PTI.
Idea Cellular subscriber base increased by 14.63 lakh to take its overall base to 17.46 crore, with a market share of 22.72 per cent.
Aircel added 6.10 lakh subscribers and its base increased to 8.66 crore, whereas Telenor added 2.50 lakh customers to take its base to 5.16 crore at the end of February.
State-run MTNL, which offers services in Delhi and Mumbai, witnessed a growth of 10,704 subscribers, taking its overall base to 35.47 lakh.
However, Videocon Telecom lost 17,917 subscribers during the period and its base decreased to 67.27 lakh.
GSM subscriber figures of BSNL, Tata Teleservices and Reliance Communications were not shared, said the media report.
Commenting on this, Michelin India Commercial Director Mohan Kumar said, “Snapdeal with its large subscriber base and pan India reach has been an obvious choice. We believe this new channel will augment our existing distribution and enable our dealers with a parallel sales pipeline.”
As per the scope of the partnership, consumers can place an order online via Snapdeal to purchase Michelin tyres from an authorised dealer.
Moreover, they can also request for fitment at a time and place of their choice.
The company said, “The consumer has the option of same day free fitment, as well as access to exclusive offers on services like alignment and balancing.”
Snapdeal Vice President, (Omni Channel) Badal Malick said, “Our recently launched omni channel platform Janus will deliver the convenience of online product discovery and offline installation services at the nearest location.”
Private equity investments during the October-December period totalled USD 3.9 billion, taking the deal value for the year 2015 to USD 19.5 billion – the “best ever” for India, said a PwC report.
According to the PwC MoneyTree India report, a quarterly study of PE investment activity based on data provided by Venture Intelligence, the fourth quarter of 2015 saw investments worth USD 3.9 billion, a 12 per cent drop as compared to the same period of 2014.
However, despite the drop, the stellar performance throughout the year helped 2015 become the best year ever, with a total of USD 19.5 billion worth of PE inflows across 159 deals, reported PTI.
“India’s macros are looking good, with the current account and fiscal deficit at acceptable levels, a relatively stable rupee, inflation at below 5 per cent and, most importantly, a declining interest rate regime. This should encourage private investment as demand picks up,” PwC India leader, Private Equity Sanjeev Krishan said.
Sectorwise, the information technology and IT-enabled services (IT & ITeS) continued to be the biggest sector, as this space attracted USD 1.3 billion in 93 deals, followed by the banking, financial services and insurance (BFSI) sector that attracted USD 910 million in 10 deals.
“In 2015, sectors such as banking, insurance and telecom saw the stabilisation of their business and opened up their technology spend over the year, thereby driving the growth of the Indian IT & ITeS industry,” PwC India leader – Technology, Sandeep Ladda said.
“Media & entertainment sector was a surprise, attracting investments worth USD 414 million,” the report said.
Regionally, Mumbai attracted USD 1.9 billion, while Bengaluru was a distant second with investments worth USD 733 million.
Going forward, Krishan said, “financial services, technology and healthcare continue to see sustained activity in 2016, while e-commerce fundraising may get challenging this year at least in the near term”.
He added that the Indian Government’s focus on making it easier for foreign investors to do business in India will help from a perception standpoint and needs to be backed by real reform.