RBI Cuts Repo By 25 Bps, CRR Unchanged At 4%; Sensex Falls 160 Pts On RBI`s "Hawkish" Policy Stance

Friday, May 03, 2013 RBI CUTS REPO BY 25 BPS; CRR UNCHANGED AT 4%   RBI trimmed repo rate to 7.25%, but warned everyone that RBI has little room for further policy easing & putting onus on govt to revive economy. RBI Governor, D Subbarao warned that risk of rising prices persists despite a recent sharp decline in WPI inflation and its intention is to lower WPI inflation to 5% by March 2014 "using all instruments at its command." Subbarao also said a high CAD poses the biggest risk "by far" to the Indian economy. RBI expects the economy to grow at 5.7% in FY14 & projected headline WPI inflation at around 5.5% in FY14. read more   LEAD STORIES SENSEX FALLS 160 PTS ON RBI'S "HAWKISH" POLICY STANCE  Sensex yo-yoed 160 pts as investors were in selling mode. Nifty fell 55.35 pts to close at 5,944 while Sensex ended at 19,575.64. read more BHARTI TO SELL 5% STAKE TO QATAR FOUNDATION FOR $1.26 BN  Bharti Airtel said they are planning to strengthen its capital structure & fund future growth plans with the stake sale money. read more MOODY'S SEES INDIA'S SOVEREIGN OUTLOOK STABLE  India's sovereign outlook is stable & does not warrant any action on India's credit rating in the next 12-18 months, according to Moody's. read more TOP STORIES • U.S. mkts rally; S&P 500 breaks above 1600 for 1st time   • Rupee at 53.93/$ down 13p as RBI policy disappoints   • No scope to cut lending rates for now: SBI   • Balaji Telefilms did not disclose Rs 30 cr income: I-T   • Sarabijit autopsy shows all vital organs missing   • Cash pile of major PSUs at Rs 1.62 lakh cr   • Govt rules out sine die adjournment of Parliament   • SBI to auction Capt Gopinath's properties on May 31   • RBI tightens screws on gold funding   • Foodgrain output revised upward by 2% to 255.36 MT   • Century Real Estate close to ink deal with Wal-Mart   • Govt to garner Rs 31,589 cr as one-time spectrum fee   • CAG sore over preferential land allotment to GMR   • Broadcasters, ad agencies resolve billings issue   • AI suspends pilot for napping on board   • PETA holds protest against Air India in U.S.   • Shashi Tharoor online quiz show from May 10   • Samsung's 8-inch Galaxy Note 510 tablet at Rs 30,900   • Buffett joins Twitter, gets 10,000 followers in 10 mins   • Citing work condition, Disney pulls out of Pak, B'desh   more stories TOP VIDEOS Economic Growth Is At Early Stages Of Recovery & WPI Inflation Has Shown Signs Of Decline; Maintain 6.4% Growth Outlook In FY14: C Rangarajan, Chairman, PMEAC   Govt Not As Pessimistic As RBI; Indian Economy Has The Potential To Grow More Than 6% In FY14: Montek Singh Ahluwalia, Dy Chairman, Planning Commission   The Fickle Nature Of The Market Makes It Impossible To Call Near-Term Movements, But Rupee Worries Is Behind Us: Sandeep Bhatia, ED, Kotak Institutional Equities   AT A GLANCE BSE 19575.64 -160.13 NSE 5944 -55.35 TURNOVER Rs. 188,208 cr BSE CASH Rs. 2,093 cr NSE CASH Rs. 11,797 cr NSE F&O Rs. 161,056 cr BULLION GOLD 26960 +46 SILVER 45038 +497 CRUDE NYMEX 95.41 +1.42 BRENT 103.97 +1.12 FOREX $ / Re 53.935 +0.13 £ / Re 83.934 +0.33 € / Re 70.739 +0.43 EVENTS TO WATCH 4 May IPL 6, Match 45, Sunrisers Hyderabad Vs Delhi Daredevils, Hyderabad 5 May IPL 6, Match 46, Mumbai Indians vs Chennai Super Kings, Mumbai IPL 6, Match 47, Rajasthan Royals vs Pune Warriors, Jaipur 6 May IPL6, Match 47, Kings XI Vs Royal challengers, Mohali 7 May JPC Meet EGoM On Gas Meet IGL Vs PNGRB Case

EXPERT VIEWS

"Monetary policy action, by itself, cannot revive growth. It needs to be supplemented by efforts towards easing the supply bottlenecks, improving governance and stepping up public investment.Overall, the balance of risks stemming from the Reserve Bank's assessment of the growth-inflation dynamics yields little space for further policy easing." D. Subbarao RBI Governor "How much scope is there? I would say 1 bps is much too high, there is no scope to cut lending rates. Effective demand in whatever you relatively see is not very much in the corporate side but the consumer demand particularly home and car continues to be strong and till such time we have enough deployment there I do not think there would be great compulsion on us to cut lending rates." Pratip Chaudhuri Chairman, SBI "The decision of RBI to cut the policy rates by 25 basis points sends a strong signal that the RBI is refocusing its priority in favour of growth. However, the given economic conditions required a bolder intervention from the RBI. In such a scenario, aggressive monetary easing affected by a 50 bps cut in repo rate would have provided the necessary stimulus, along with a 50 bps reduction in CRR." S Gopalakrishnan CII President