Key indices edge lower for the second day in a row
Stocks of metal and mining companies, oil sector firms and public sector companies led losses for key benchmark indices. The barometer index, the S&P BSE Sensex, lost 285.83 points or 1.15% to settle at 24,539. The losses for the 50-unit Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty dropped 100.40 points or 1.33% to settle at 7,455.55. After seeing high volatility in mid-morning trade in the aftermath of the Reserve Bank of India's (RBI) decision to keep its benchmark interest rate unchanged after a monetary policy review, the Sensex and the Nifty moved decisively lower later on weakness in European stocks and losses for US index futures, with the two key benchmark indices extending losses in late trade. The Sensex and the Nifty edged lower for the second day in a row. World stocks fell as fresh losses for oil weighed on sentiment.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,843 shares fell and 859 shares rose. A total of 106 shares were unchanged. A number of stocks forming part of the BSE Small-Cap index registered losses exceeding 4% for the trading session. The BSE Small-Cap index skidded 1.25%. The BSE Mid-Cap index shed 1.74%. The losses for both these indices were higher in percentage terms than those for the Sensex.
Shares of oil exploration and production (E&P) companies declined on sharp drop in crude oil price. Bank stocks edged lower after the RBI kept the repo rate and the cash reserve ratio (CRR) unchanged after the latest policy review. Tech Mahindra dropped after announcing Q3 results. Lupin moved higher after the company's US subsidiary announced the launch of a generic drug in the US.
The Sensex lost 285.83 points or 1.15% to settle at 24,539, its lowest closing level since 28 January 2016. The index lost 364.30 points or 1.46% at the day's low of 24,460.53. The index rose 103.92 points or 0.41% at the day's high of 24,928.75.
The Nifty dropped 100.40 points or 1.33% to settle at 7,455.55, its lowest closing level since 28 January 2016. The index lost 127.90 points or 1.69% at the day's low of 7,428.05. The index rose 20.35 points or 0.26% at the day's high of 7,576.30..
The total turnover on BSE amounted to Rs 2888 crore, higher than turnover of Rs 2603.85 crore registered during the previous trading session.
Among sectoral indices on BSE, the S&P BSE Utilities index (down 2.11%), the S&P BSE Power index (down 2.42%), the S&P BSE Auto index (down 1.39%), the S&P BSE Finance index (down 1.3%), the S&P BSE Bankex (down 1.68%), the S&P BSE Oil & Gas index (down 2.59%), the S&P BSE Realty index (down 1.71%), the S&P BSE Healthcare index (down 2.46%), the S&P BSE Basic Materials index (down 2.4%), the S&P BSE Metal index (down 4.33%), the S&P BSE Industrials index (down 1.79%), and the S&P BSE Energy index (down 2.69%) underperformed the Sensex. The S&P BSE Consumer Discretionary Goods & Services index (down 1.02%), the S&P BSE Telecom index (up 0.41%), the S&P BSE Teck index (down 0.19%), the S&P BSE IT index (down 0.17%), the S&P BSE FMCG index (down 0.44%), and the S&P BSE Capital Goods index (down 0.9%) outperformed the Sensex.
In overseas stock markets, European stocks edged lower as oil prices resumed their downward trend and as concerns over global economic growth persisted. Trading in US stock index futures pointed to losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 108 points at the opening bell today, 2 February 2016.
Asian equities edged lower on fresh weakness in oil prices. But Chinese stocks edged higher after the country's central bank injected more liquidity into the financial system, in a move to stave off potential liquidity squeezes ahead of the weeklong Lunar New Year holiday that starts on 7 February 2016. The Shanghai Composite index settled 2.26% higher.
Bank stocks edged lower after the RBI kept the repo rate and the cash reserve ratio (CRR) unchanged after the latest policy review. Among public sector banks, State Bank of India (down 2.28%), Bank of Baroda (down 0.86%), Punjab National Bank (down 1%), Indian Bank (down 1.85%), Canara Bank (down 0.99%) and Bank of India (down 1.38%) declined. IDBI Bank (up 1.2%) edged higher.
Among private sector banks, ICICI Bank (down 2.95%), Axis Bank (down 2.03%), IndusInd Bank (down 1.91%), Kotak Mahindra Bank (down 2.14%), Yes Bank (down 1.06%) and HDFC Bank (down 0.73%) edged lower.
Most auto stocks declined after the RBI kept the repo rate unchanged after the latest policy review. Ashok Leyland (down 0.6%), Maruti Suzuki India (down 1.79%) and TVS Motor Company (down 0.86%) declined. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Tata Motors dropped 2.56% to Rs 329.70. The stock was volatile. The stock hit high of Rs 344.60 and low of Rs 328.10 in intraday trade. The company said total sales of Tata Motors passenger and commercial vehicles rose 10% at 47,034 vehicles in January 2016 over January 2015. The announcement was made by the company after market hours yesterday, 1 February 2016.
Mahindra & Mahindra (M&M) shed 1.79%. The company after market hours yesterday, 1 February 2016, announced that it has completed the sale of equity shares in its subsidiary Swaraj Automotives. M&M said it has received a consideration of Rs 24.83 crore from the sale of shares.
Bajaj Auto gained 1.48%. The company's total sales rose 2% to 2.93 lakh units in January 2016 over January 2015. Sales of motorcycles rose 2% to 2.52 lakh units in January 2016 over January 2015. Sales of commercial vehicles declined 2% to 40,951 units in January 2016 over January 2015. Exports dropped 8% to 1.32 lakh units in January 2016 over January 2015. The company announced the sales volume data before market hours today, 2 February 2016.
Hero MotoCorp declined 0.52% to Rs 2,521.80. The stock was volatile after the company reported monthly sales figures. The stock hit high of Rs 2,545.50 and low of Rs 2,510.25 in intraday trade. The company said its two-wheeler sales rose 0.89% at 5.63 lakh units in January 2016 over January 2015. Riding on the success of scooter range, driven by the new Maestro Edge and Duet, the company continues to expand its market share in the scooter segment, Hero MotoCorp said. Hero MotoCorp scooter sales rose 20% in January 2016 over January 2015.
Steel stocks led decline in metal and mining stocks. Tata Steel (down 7.6%), Jindal Steel & Power (down 5.72%), Steel Authority of India (down 7.61%) and JSW Steel (down 4.43%) edged lower. Among other metal stocks, Hindalco Industries (down 3.8%), Hindustan Zinc (down 2.96%) and National Aluminium Company (down 1.44%) declined.
Stocks of iron ore makers edged lower. Vedanta (down 8.38%) and NMDC (down 1.18%) declined. According to reports, the mines ministry has written to the finance ministry to withdraw 10% export duty on low-quality iron ore from Goa to help boost sales amid a sharp fall in prices. Goa is known for low-grade ore used mainly by Chinese steel mills.
Index heavyweight and housing finance major HDFC fell 0.36% at Rs 1,175.25. The stock hit a high of Rs 1,192.85 and a low of Rs 1,166.50 in intraday trade. HDFC announced during market hours today, 2 February 2016, that it intends to raise Rs 510 crore through private placement of senior secured redeemable non-convertible debentures. The debentures have a tenor of 3 years 131 days with a coupon rate of 8.59% per annum. The issue opens and closes on the same day tomorrow, 3 February 2016.
Tech Mahindra dropped after announcing Q3 results. The stock lost 4.68% at Rs 475.45. Tech Mahindra's consolidated net profit fell 3.4% to Rs 759 crore on 1.3% increase in revenue to Rs 6701 crore in Q3 December 2015 over Q2 September 2015. The sequential decline in bottom line was due to a sharp fall in non-operational income or the so called other income. The other income dropped 61.43% to Rs 63.94 crore in Q3 December 2015 over Q2 September 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 3.2% to Rs 1136 crore in Q3 December 2015 over Q2 September 2015. The EBITDA margin edged higher to 16.95% in Q3 December 2015 from 16.64% in Q2 September 2015. The result was announced after market hours yesterday, 1 February 2016.
In US dollar terms, Tech Mahindra's net profit fell 3.7% to $115 million on 0.4% growth in revenue at $1015 million in Q3 December 2015 over Q2 September 2015. EBITDA rose 2.5% at $172 million in Q3 December 2015 over Q2 September 2015. The EBITDA margin stood at 16.9% in Q3 December 2015, an increase of 30 basis points on sequential basis. In constant currency terms, Tech Mahindra's revenue rose 1.2% on sequential basis in Q3 December 2015.
Stocks of public sector firms declined. NTPC (down 4.28%), Coal India (down 2.92%), GAIL (India) (down 1.4%), Bharat Heavy Electricals (Bhel) (down 3.99%), Bharat Electronics (down 0.82%) and Power Grid Corporation of India (down 0.58%) declined.
Pharma stocks declined. Aurobindo Pharma (down 4.28%), Cipla (down 3.98%), Glenmark Pharmaceuticals (down 5.1%), Wockhardt (down 2.48%), Ipca Laboratories (down 0.8%), Alkem Laboratories (down 0.43%), Dr Reddy's Laboratories (down 0.15%), GlaxoSmithkline Pharmaceuticals (down 0.41%), Divi's Laboratories (down 1.54%) and Cadila Healthcare (down 1.04%) edged lower.
Sun Pharmaceutical Industries (Sun Pharma) was down 4.12%. Strides Shasun was off 3.96%. Sun Pharma announced after market hours yesterday, 1 February 2016, that Strides Shasun has completed the acquisition of CNS divisions of erstwhile Ranbaxy Laboratories. It may be recalled that Sun Pharma had acquired Ranbaxy Laboratories.
Separately, Sun Pharma announced after market hours yesterday, 1 February 2016, the launch of Imatinib Mesylate Tablets (therapeutic equivalent to Gleevec for indications approved by the FDA) in US market. Sun Pharma's subsidiary received final approval for Imatinib Mesylate from United States Food & Drug Administration (USFDA) in December 2015. Being a First-to-File product, it was granted 180 days of marketing exclusivity by FDA from the time of its launch.
Lupin rose 0.71% at Rs 1,713.45 after the company's US subsidiary Lupin Pharmaceuticals Inc. announced the launch of its Metformin HCI ER Tablets, 500 mg and 1000 mg in the US. The drug is a generic equivalent of Santarus Inc.'s Glumetza HCI ER Tablets, 500 mg and 1000 mg. Lupin is eligible for 180 days of generic drug exclusivity for its Metformin HCI ER Tablets, 500 mg and 1000 mg. Glumetza HCI ER Tablets had annual sales of $450.4 million in the US as per IMS MAT Septemer 2015 data. The drug is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes mellitus.
Shares of oil exploration and production (E&P) companies declined on sharp drop in crude oil price. Cairn India (down 4.98%), Oil India (down 2.62%), ONGC (down 3.6%) and Reliance Industries (down 2.54%) edged lower. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms.
Shares of state-run oil marketing companies (PSU OMCs) also declined. HPCL (down 2.35%) and Indian Oil Corporation (down 1.29%) edged lower.
BPCL lost 3.32% as the stock turned ex-dividend today, 2 February 2016, for interim dividend of Rs 12.50 per share for the year ending 31 March 2016.
In the global commodities markets, Brent for April settlement was currently off $1.07 a barrel at $33.17 a barrel. The contract had declined $1.75 a barrel or 4.86% to settle at $34.24 a barrel during previous trading session.
The Sensex and the Nifty edged lower for the second day in a row. The Sensex has declined 331.69 points or 1.33% in the two sessions from its close of 24,870.69 on 29 January 2016. The Sensex has fallen 1,578.54 points or 6.04% in calendar year 2016 so far (till 2 February 2016). The Sensex is up 699.24 points or 2.93% from a 52-week low of 23,839.76 hit on 20 January 2016. The Sensex is off 5,485.74 points or 18.27% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, the Reserve Bank of India kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a scheduled monetary policy review today, 2 February 2016. The RBI kept the cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL). While retaining accommodative stance of the monetary policy, RBI Governor Raghuram Rajan said in a statement that structural reforms in the Union Budget 2016-17 that boost growth while controlling spending will create more space for monetary policy to support growth. With unfavourable base effects on the ebb and benign prices of fruits and vegetables and crude oil, the January 2016 consumer price inflation target of 6% should be met, the RBI said. Consumer price inflation stood at 5.61% in December 2015.
Going forward, under the assumption of a normal monsoon and the current level of international crude oil prices and exchange rates, inflation is expected to be inertial and be around 5% by the end of fiscal 2016-17, RBI said. However, the implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years, the RBI said.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,843 shares fell and 859 shares rose. A total of 106 shares were unchanged. A number of stocks forming part of the BSE Small-Cap index registered losses exceeding 4% for the trading session. The BSE Small-Cap index skidded 1.25%. The BSE Mid-Cap index shed 1.74%. The losses for both these indices were higher in percentage terms than those for the Sensex.
Shares of oil exploration and production (E&P) companies declined on sharp drop in crude oil price. Bank stocks edged lower after the RBI kept the repo rate and the cash reserve ratio (CRR) unchanged after the latest policy review. Tech Mahindra dropped after announcing Q3 results. Lupin moved higher after the company's US subsidiary announced the launch of a generic drug in the US.
The Sensex lost 285.83 points or 1.15% to settle at 24,539, its lowest closing level since 28 January 2016. The index lost 364.30 points or 1.46% at the day's low of 24,460.53. The index rose 103.92 points or 0.41% at the day's high of 24,928.75.
The Nifty dropped 100.40 points or 1.33% to settle at 7,455.55, its lowest closing level since 28 January 2016. The index lost 127.90 points or 1.69% at the day's low of 7,428.05. The index rose 20.35 points or 0.26% at the day's high of 7,576.30..
The total turnover on BSE amounted to Rs 2888 crore, higher than turnover of Rs 2603.85 crore registered during the previous trading session.
Among sectoral indices on BSE, the S&P BSE Utilities index (down 2.11%), the S&P BSE Power index (down 2.42%), the S&P BSE Auto index (down 1.39%), the S&P BSE Finance index (down 1.3%), the S&P BSE Bankex (down 1.68%), the S&P BSE Oil & Gas index (down 2.59%), the S&P BSE Realty index (down 1.71%), the S&P BSE Healthcare index (down 2.46%), the S&P BSE Basic Materials index (down 2.4%), the S&P BSE Metal index (down 4.33%), the S&P BSE Industrials index (down 1.79%), and the S&P BSE Energy index (down 2.69%) underperformed the Sensex. The S&P BSE Consumer Discretionary Goods & Services index (down 1.02%), the S&P BSE Telecom index (up 0.41%), the S&P BSE Teck index (down 0.19%), the S&P BSE IT index (down 0.17%), the S&P BSE FMCG index (down 0.44%), and the S&P BSE Capital Goods index (down 0.9%) outperformed the Sensex.
In overseas stock markets, European stocks edged lower as oil prices resumed their downward trend and as concerns over global economic growth persisted. Trading in US stock index futures pointed to losses for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could slide 108 points at the opening bell today, 2 February 2016.
Asian equities edged lower on fresh weakness in oil prices. But Chinese stocks edged higher after the country's central bank injected more liquidity into the financial system, in a move to stave off potential liquidity squeezes ahead of the weeklong Lunar New Year holiday that starts on 7 February 2016. The Shanghai Composite index settled 2.26% higher.
Bank stocks edged lower after the RBI kept the repo rate and the cash reserve ratio (CRR) unchanged after the latest policy review. Among public sector banks, State Bank of India (down 2.28%), Bank of Baroda (down 0.86%), Punjab National Bank (down 1%), Indian Bank (down 1.85%), Canara Bank (down 0.99%) and Bank of India (down 1.38%) declined. IDBI Bank (up 1.2%) edged higher.
Among private sector banks, ICICI Bank (down 2.95%), Axis Bank (down 2.03%), IndusInd Bank (down 1.91%), Kotak Mahindra Bank (down 2.14%), Yes Bank (down 1.06%) and HDFC Bank (down 0.73%) edged lower.
Most auto stocks declined after the RBI kept the repo rate unchanged after the latest policy review. Ashok Leyland (down 0.6%), Maruti Suzuki India (down 1.79%) and TVS Motor Company (down 0.86%) declined. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Tata Motors dropped 2.56% to Rs 329.70. The stock was volatile. The stock hit high of Rs 344.60 and low of Rs 328.10 in intraday trade. The company said total sales of Tata Motors passenger and commercial vehicles rose 10% at 47,034 vehicles in January 2016 over January 2015. The announcement was made by the company after market hours yesterday, 1 February 2016.
Mahindra & Mahindra (M&M) shed 1.79%. The company after market hours yesterday, 1 February 2016, announced that it has completed the sale of equity shares in its subsidiary Swaraj Automotives. M&M said it has received a consideration of Rs 24.83 crore from the sale of shares.
Bajaj Auto gained 1.48%. The company's total sales rose 2% to 2.93 lakh units in January 2016 over January 2015. Sales of motorcycles rose 2% to 2.52 lakh units in January 2016 over January 2015. Sales of commercial vehicles declined 2% to 40,951 units in January 2016 over January 2015. Exports dropped 8% to 1.32 lakh units in January 2016 over January 2015. The company announced the sales volume data before market hours today, 2 February 2016.
Hero MotoCorp declined 0.52% to Rs 2,521.80. The stock was volatile after the company reported monthly sales figures. The stock hit high of Rs 2,545.50 and low of Rs 2,510.25 in intraday trade. The company said its two-wheeler sales rose 0.89% at 5.63 lakh units in January 2016 over January 2015. Riding on the success of scooter range, driven by the new Maestro Edge and Duet, the company continues to expand its market share in the scooter segment, Hero MotoCorp said. Hero MotoCorp scooter sales rose 20% in January 2016 over January 2015.
Steel stocks led decline in metal and mining stocks. Tata Steel (down 7.6%), Jindal Steel & Power (down 5.72%), Steel Authority of India (down 7.61%) and JSW Steel (down 4.43%) edged lower. Among other metal stocks, Hindalco Industries (down 3.8%), Hindustan Zinc (down 2.96%) and National Aluminium Company (down 1.44%) declined.
Stocks of iron ore makers edged lower. Vedanta (down 8.38%) and NMDC (down 1.18%) declined. According to reports, the mines ministry has written to the finance ministry to withdraw 10% export duty on low-quality iron ore from Goa to help boost sales amid a sharp fall in prices. Goa is known for low-grade ore used mainly by Chinese steel mills.
Index heavyweight and housing finance major HDFC fell 0.36% at Rs 1,175.25. The stock hit a high of Rs 1,192.85 and a low of Rs 1,166.50 in intraday trade. HDFC announced during market hours today, 2 February 2016, that it intends to raise Rs 510 crore through private placement of senior secured redeemable non-convertible debentures. The debentures have a tenor of 3 years 131 days with a coupon rate of 8.59% per annum. The issue opens and closes on the same day tomorrow, 3 February 2016.
Tech Mahindra dropped after announcing Q3 results. The stock lost 4.68% at Rs 475.45. Tech Mahindra's consolidated net profit fell 3.4% to Rs 759 crore on 1.3% increase in revenue to Rs 6701 crore in Q3 December 2015 over Q2 September 2015. The sequential decline in bottom line was due to a sharp fall in non-operational income or the so called other income. The other income dropped 61.43% to Rs 63.94 crore in Q3 December 2015 over Q2 September 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 3.2% to Rs 1136 crore in Q3 December 2015 over Q2 September 2015. The EBITDA margin edged higher to 16.95% in Q3 December 2015 from 16.64% in Q2 September 2015. The result was announced after market hours yesterday, 1 February 2016.
In US dollar terms, Tech Mahindra's net profit fell 3.7% to $115 million on 0.4% growth in revenue at $1015 million in Q3 December 2015 over Q2 September 2015. EBITDA rose 2.5% at $172 million in Q3 December 2015 over Q2 September 2015. The EBITDA margin stood at 16.9% in Q3 December 2015, an increase of 30 basis points on sequential basis. In constant currency terms, Tech Mahindra's revenue rose 1.2% on sequential basis in Q3 December 2015.
Stocks of public sector firms declined. NTPC (down 4.28%), Coal India (down 2.92%), GAIL (India) (down 1.4%), Bharat Heavy Electricals (Bhel) (down 3.99%), Bharat Electronics (down 0.82%) and Power Grid Corporation of India (down 0.58%) declined.
Pharma stocks declined. Aurobindo Pharma (down 4.28%), Cipla (down 3.98%), Glenmark Pharmaceuticals (down 5.1%), Wockhardt (down 2.48%), Ipca Laboratories (down 0.8%), Alkem Laboratories (down 0.43%), Dr Reddy's Laboratories (down 0.15%), GlaxoSmithkline Pharmaceuticals (down 0.41%), Divi's Laboratories (down 1.54%) and Cadila Healthcare (down 1.04%) edged lower.
Sun Pharmaceutical Industries (Sun Pharma) was down 4.12%. Strides Shasun was off 3.96%. Sun Pharma announced after market hours yesterday, 1 February 2016, that Strides Shasun has completed the acquisition of CNS divisions of erstwhile Ranbaxy Laboratories. It may be recalled that Sun Pharma had acquired Ranbaxy Laboratories.
Separately, Sun Pharma announced after market hours yesterday, 1 February 2016, the launch of Imatinib Mesylate Tablets (therapeutic equivalent to Gleevec for indications approved by the FDA) in US market. Sun Pharma's subsidiary received final approval for Imatinib Mesylate from United States Food & Drug Administration (USFDA) in December 2015. Being a First-to-File product, it was granted 180 days of marketing exclusivity by FDA from the time of its launch.
Lupin rose 0.71% at Rs 1,713.45 after the company's US subsidiary Lupin Pharmaceuticals Inc. announced the launch of its Metformin HCI ER Tablets, 500 mg and 1000 mg in the US. The drug is a generic equivalent of Santarus Inc.'s Glumetza HCI ER Tablets, 500 mg and 1000 mg. Lupin is eligible for 180 days of generic drug exclusivity for its Metformin HCI ER Tablets, 500 mg and 1000 mg. Glumetza HCI ER Tablets had annual sales of $450.4 million in the US as per IMS MAT Septemer 2015 data. The drug is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes mellitus.
Shares of oil exploration and production (E&P) companies declined on sharp drop in crude oil price. Cairn India (down 4.98%), Oil India (down 2.62%), ONGC (down 3.6%) and Reliance Industries (down 2.54%) edged lower. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms.
Shares of state-run oil marketing companies (PSU OMCs) also declined. HPCL (down 2.35%) and Indian Oil Corporation (down 1.29%) edged lower.
BPCL lost 3.32% as the stock turned ex-dividend today, 2 February 2016, for interim dividend of Rs 12.50 per share for the year ending 31 March 2016.
In the global commodities markets, Brent for April settlement was currently off $1.07 a barrel at $33.17 a barrel. The contract had declined $1.75 a barrel or 4.86% to settle at $34.24 a barrel during previous trading session.
The Sensex and the Nifty edged lower for the second day in a row. The Sensex has declined 331.69 points or 1.33% in the two sessions from its close of 24,870.69 on 29 January 2016. The Sensex has fallen 1,578.54 points or 6.04% in calendar year 2016 so far (till 2 February 2016). The Sensex is up 699.24 points or 2.93% from a 52-week low of 23,839.76 hit on 20 January 2016. The Sensex is off 5,485.74 points or 18.27% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, the Reserve Bank of India kept its benchmark interest rate viz. the repo rate unchanged at 6.75% after a scheduled monetary policy review today, 2 February 2016. The RBI kept the cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL). While retaining accommodative stance of the monetary policy, RBI Governor Raghuram Rajan said in a statement that structural reforms in the Union Budget 2016-17 that boost growth while controlling spending will create more space for monetary policy to support growth. With unfavourable base effects on the ebb and benign prices of fruits and vegetables and crude oil, the January 2016 consumer price inflation target of 6% should be met, the RBI said. Consumer price inflation stood at 5.61% in December 2015.
Going forward, under the assumption of a normal monsoon and the current level of international crude oil prices and exchange rates, inflation is expected to be inertial and be around 5% by the end of fiscal 2016-17, RBI said. However, the implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years, the RBI said.
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