When the Governor says June quarter GDP print was a shock for RBI, it clearly shows the Indian central bank has been left behind the curve. And now as the slowdown in the economy becomes more pronounced, it sets the stage for deeper rate cuts. But oil prices have turned more volatile, threatening to build up inflationary pressure, which creates a dilemma. As Dalal Street veteran Shankar Sharma says, maybe RBI should loosen up a bit on inflation to help rekindle growth.
STREET PULSE: Where we stand Asian shares edged higher this morning, tracking some modest Wall Street gains after the US Federal Reserve cut interest rates as expected.
Read More  | Nifty futures on Singapore Exchange traded flat, signalling dull trade on Dalal Street. MSCI index of Asia-Pacific shares outside Japan rose 0.03%; Nikkei gained 0.46%, while Australian shares 0.23%. |
| Dow dropped sharply overnight by 185 points after the Fed rate cut only to mount a stunning recovery in late trade and end 36 points higher. The S&P500 ticked up 1.03 points and but Nasdaq declined 0.1 per cent. US stock futures slipped 0.06% in Asia this morning. |
Oil prices edged higher after days of turbulence, with markets soothed by Saudi Arabia's pledge to restore full production by end-September at facilities knocked out in drone and missile attacks. Brent crude futures rose 8 cents to $63.68 a barrel while WTI crude was up 12 cents to $58.23 a barrel.
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Fed Insures Against Growth Risks!... The US Federal Reserve cut interest rates again by 25 bps on Wednesday to help sustain a record-long economic expansion but signalled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump. Describing the US economic outlook as "favourable," Fed Chair Jerome Powell said the rate cut was designed "to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions.
Read More | New body to manage Rs 10 lakh cr EPFO money >>> |
| Rupee 12-month forwards premium surges 40 bps >>> |
Fast Forward on Coal Reforms… India plans to invite bids from global firms for the first time for coal mining blocks before end-2019, sources familiar with the matter said, a move that would end Coal India Ltd's near-monopoly for the fuel as the nation tries to cut imports. The coal block auctions are intended to attract global miners such as Glencore PLC, BHP Group, Anglo American and Peabody Energy Corp. The government aims to allow these companies to develop coal blocks – that hold proven reserves - by early 2020.
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Consumer Goods Growth Slowest… India's consumer goods industry could post its slowest pace of revenue growth in a decade and a half this financial year, Credit Suisse said, even as category leaders Dabur and Godrej Consumer sounded more optimistic about sales revival in the second half of FY20. Liquidity constraints and lower farm incomes will likely affect revenues at India's leading consumer companies, which Credit Suisse said had harnessed savings from the GST rollout and fuel costs to expand operating margins and earnings over the past few years.
Read More Tax Mopup Slows... Against a steep 17.5% higher tax collection budgeted for the full year, the government could mop up only 4.7% more so far this year, with the direct tax kitty growing to Rs 5.5 lakh crore as of September 17, up from Rs 5.25 lakh crore a year-ago. The lower mop-up reflects the deepening slump in demand and overall growth.
Read More Meanwhile...Airfares for the upcoming festival season starting October have inched up from their lows in September and are also higher than the same time last year. But a creeping slowdown in demand for travel will keep the fares reined in compared with the high levels of April-June.
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