Wednesday, December 5, 2018

RBI keeps rates on hold, moves to spur lending

The Reserve Bank of India (RBI) kept interest rates unchanged on Wednesday, in a decision that was widely expected as inflation has eased significantly, while it took steps to persuade banks to lend more in order to support an economy that has lost some momentum.
FILE PHOTO - The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai October 29, 2013. REUTERS/Danish Siddiqui/File Photo
“The time is apposite to further strengthen domestic macro-economic fundamentals,” the central said in a statement following a monetary policy committee (MPC) meeting.
The decision to keep the repo rate unchanged at 6.50 percent was as predicted by 64 of 70 analysts in a Reuters poll. The central bank also retained its ‘calibrated tightening’ stance as expected.
All six members of the MPC voted to keep the rates on hold.
“Even as inflation projections have been revised downwards significantly and some of the risks pointed out in the last resolution have been mitigated, especially of crude oil prices, several uncertainties still cloud the inflation outlook,” the bank said in its statement.
The central bank said starting in the January-March quarter of 2019 it would begin to lower banks’ mandatory bond holding ratios, by 25 basis points each quarter until it reaches 18 percent of deposits.
The so-called statutory liquidity ratio (SLR) currently stands at 19.50 percent and the move to lower the SLR should prod banks to lend more rather than park their cash in safe-haven government securities.
India’s 10-year benchmark bond yield was trading at 7.46 percent from 7.54 percent before the policy statement.

Have offered to repay 100% to banks, please take it, says Vijay Mallya

Fugitive Indian businessman Vijay Mallya, who is fighting extradition from the U.K., has refuted allegations he fled the South Asian nation after defaulting on loans and offered to pay lenders back the principal amounts he owes.
“Please take it,” Mallya said in two separate tweets. “Politicians and Media are constantly talking loudly about my being a defaulter who has run away with PSU Bank money. All this is false,” he wrote, referring to public-sector or state-controlled lenders in India, which are weighed down with billions of dollars of soured debt.
The 62-year-old Mallya has become something of a fixture in London courts as he fights numerous cases including one to block his extradition to India on fraud charges and another to prevent UBS Group AG from foreclosing on a mortgage on his London house, which overlooks the capital’s Regent’s Park. A decision on the extradition case is expected on Dec. 10, Press Trust of India reported.
The source of Mallya’s legal problems is about $1.3 billion in loans that he took out in India for the now defunct Airlines Ltd., which he founded in 2005 and shut down seven years later. Disputes over the loans led to civil lawsuits in India and the U.K. as well as criminal fraud charges.
Mallya in August cited poor jail conditions in India to stave off extradition. In his recent string of tweets he said, the effort to bring him back to India “will take its own legal course" and asked why lenders are refusing his payback offer. On the soured loan, he said, losses at his airline had mounted as crude prices climbed to $140 a barrel.

“Losses mounted and that’s where Banks money went,” he tweeted. “I have offered to repay 100 percent of the Principal amount to them. Please take it.”

Tuesday, December 4, 2018

India, UAE sign currency swap deal

At the Joint Commission Meeting, India seeks to forge partnership in new areas

India and the UAE on Tuesday signed two agreements, including one on currency swap, as External Affairs Minister Sushma Swaraj held exhaustive discussions with her counterpart Abdullah bin Zayed Al Nahyan to step up cooperation in areas like trade, security and defence.
Ms. Swaraj, who arrived here on Monday on a two-day visit, was received by the Foreign Minister of the UAE ahead of the UAE-India Joint Commission Meeting.
“Advancing the Comprehensive Strategic Partnership...EAM @SushmaSwaraj & Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan co-chaired 12th India-UAE #JCM. Held exhaustive discussions on cooperation in energy, security, trade, investments, space, defence & consular, among others,” External Affairs Ministry spokesperson Raveesh Kumar tweeted.
This is the 12th session of the India-UAE Joint Commission Meeting for Economic and Technical Cooperation.
“Institutional mechanisms guiding the multifaceted cooperation...Two documents signed during the visit of EAM @SushmaSwaraj to #UAE : Agreement on Currency Swap and MoU for Development Cooperation in Africa,” Mr. Kumar tweeted.
Currency Swap is such a pact between two countries that allows trading in their own currency and payments to import and export trade at pre-determined exchange rate without bringing in a third benchmark currency like the US dollars.
The second agreement would enable both sides to undertake development projects in Africa.
“Reinforcing the strong bonds of friendship...The Ministers looked forward to continuing the trend to strengthen & seek partnership in new areas,” Mr. Kumar tweeted.
“Following the India-UAE Joint Commission Meeting, EAM @SushmaSwaraj and Foreign Minister of UAE Sheikh Abdullah bin Zayed Al Nahyan signed and adopted the Agreed Minutes of the #JCM,” Mr. Kumar tweeted.
With nearly $ 50 billion bilateral trade, the two countries are one of the largest trade partners for each other and have made robust investments bilaterally. The UAE is the sixth-largest source of Indian oil imports and hosts a 3.3 million-strong Indian community.
Along with the UAE Foreign Minister, Ms. Swaraj would also inaugurate a Gandhi-Zayed Digital Museum in Abu Dhabi to mark the celebrations of 150 years of Mahatma Gandhi’s birth and centenary celebrations of the birth of Sheikh Zayed, founder of the modern UAE.
The External Affairs Minister would also interact with the Indian community in Abu Dhabi.

Tech view: Nifty forms indecisive Doji, negates higher highs & lows

The Nifty50 took a breather on Tuesday and edged lower after a six-day winning streak. The index negated the formation of higher highs and higher lows that it had made in last five sessions and formed an indecisive Doji on the daily chart. 

This was also the third day when the index could not end higher from its opening level. 

On a 60-minute timeframe, the index has been forming lower highs, taking support in the 10,845-40 range, which indicates the possibility of some more weakness next session, said Nagaraj Shetti, Technical Research Analyst at HDFC Securities. 

For the day, the index fell 14.25 points, or 0.13 per cent, to close at 10,869. The index has to hold the crucial support in the 10,777-10,800 range to extend its move towards THE 10,929 level, said Chandan Taparia of Motilal Oswal Securities. 

On the downside, support is seen at 10,777 and then 10,650 levels. The momentum oscillators on lower time frame charts generated a sell signal, which is a cause for concern, said Mazhar Mohammad of Chartviewindia.in. 

“After RBI’s policy outcome, if the index fails to rally beyond 10,950, it can be a sign of near-term weakness for the market. A short-term breakdown will be confirmed on any close below the 10,747 level. There may not be a compelling low-risk trading opportunity even after the money policy. Traders are advised to remain extremely stock specific with a neutral bias, 

Nifty hovered between 100-DMA and 200-DMA levels for the fourth day in a row. 

"The key market internals remained below equilibrium. Considering the above developments, rallies towards 10,950-11,100 should be used to reduce speculative long positions,” said Arun Kumar, Market Strategist at Reliance Securities.