RBI proposes, Markets say Yay!

Nifty50: 17,871 ▲ 150 (+0.8%)
Sensex: 60,663 ▲ 377 (+0.6%)

Hello, dear reader!

It is that time of the year again. 

Valentine’s week has officially started. Most newly-minted lovebirds revere it, singles detest it and the rest cringe at the mention of it. 

No matter where you stand, a Mumbai man’s sheer dedication and creativity to find a date is worth your attention. Here’s what he did. 

To make his profile stand out on dating apps, 22-year-old Nairit created a presentation. Yes, you read it right. It has slides as his pictures for dating app profiles. They also have details about him and what he likes etc. 

Was his effort worth it? The answer is Yes!

Nairit’s ‘presentation’ not only helped him get more matches on Bumble and Hinge but also compliments from his matches. Some social media users went on to request him to make a similar presentation for them too. ‘Love’ by PPT, any one?

We don’t know if this creative endeavour will get him his true love. But we do know that the RBI swept the markets off its feet today. Read on.

• Indices positive after RBI’s ‘small’ rate hike. 
• Out of NIfty50, 38 companies closed in the green.
• Most Adani companies continued to rebound. 

All Nifty sectoral indices closed in the green with Metal (+3.7%) and IT(+1.5%) being the top gainers.

What’s trending

⭐ Cement stocks gain   

Shares of leading cement manufacturers like UltraTech Cement(3.1%), Dalmia Bharat (4.1%), Shree Cement(1.4%) witnessed strong intraday gains after the Finance Minister indicated that the government could consider a review of the 28% GST levied on cement, a long-standing demand of the infrastructure sector.

⭐ Adani Wilmar reports healthy numbers 

FMCG firm Adani Wilmar (4.9%) net profit rose 16% YoY to ₹246 crore in the December quarter. In the same period, the consolidated revenue also rose 7% to ₹15,438 crore. Meanwhile, volumes grew by 16% to 1.47 million tonnes. Market share gains in edible oil business and volume growth supported the quarterly earnings growth.

⭐ TCS bags £600 million deal 

Shares of TCS (+1.6%) surged after the company said it has secured a £600 million (approx ₹5,900 crore) deal from Phoenix Group, a UK-based insurance services provider. The company will work along with Phoenix Group to digitally transform its product offering. 

⭐ Shree Cements declares dividend 

Shree Cements (+0.1%) reported 44% YoY drop in net profit to ₹277 crore during the December quarter. Meanwhile, its revenue from operations increased by 15% to ₹4,069 crore. Despite lower profitability, the company has announced an interim dividend of ₹45 per share.

In Focus

RBI hikes rates one last time in FY23

In its last meeting in FY23, the Reserve Bank of India (RBI) hiked key lending rates by 0.25% to 6.50%. This is the sixth consecutive rate hike by the central bank. The quantum of rate hike was lesser this time as compared to previous hikes. Still, it was enough to restore rates to a level last seen in January 2019. (Click here for the video)

Here are the key points the RBI made on Inflation and growth. 

Inflation: Expect it to reduce 

Inflation is already declining. In December 2022, inflation moderated to 5.72%. This was due to a reduction in food prices.

However, RBI did point out that the core inflation (explainer below) is not budging yet. That’s the reason the central bank decided to go for a smaller rate hike this time.  

RBI expects retail inflation at 5.3% in the next financial year. 

What does this mean for you?

The quantum of rate hike was lesser this time, however EMIs of your existing loans will go up or the tenure will increase. New loans could get dearer. 

Outlook on Growth 

The RBI estimates India’s economy will grow at 6.4% in FY24 supported by factors like increasing rural and urban consumption, strong demand for loans and government spending more on capital expansion.

RBI also said that the global outlook is not as grim right now as it was a few months ago. It noted that growth prospects in major economies have improved.

How did the markets react?

Markets reacted positively after the policy announcement. With several banking stocks like State Bank of India, Punjab National Bank and ICICI Bank witnessing gains of 0.9 – 1.3%. An interest rate hike ultimately increases the lending rate which benefits the banking sector.  

On the flip side, Auto and Realty indices were on the lower side throughout the trading session. Rising interest rates makes home loans and car loans expensive which reduces affordability for end consumers. 

RBI will meet next in April 2023.

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What is core inflation?

It is a measure of inflation that tracks changes in the costs of goods and services excluding the food and energy sector. Why? Because the prices of these items tend to be much more volatile than others. To calculate core inflation, the consumer price index or CPI is used which is the measure of prices for goods and services. Core inflation helps in determining the impact of inflation on consumer income.

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