The Reserve Bank’s decision on Friday to raise the key interest rate by half a percentage point will increase the EMIs for home, auto and other loans, though the hawkish move was cheered by both equity and forex markets, with the benchmark BSE Sensex rising more than 1,000 points and the rupee appreciating by 33 paise against the US dollar.
Meanwhile, the government announced a steep 40 per cent increase in price of natural gas which will eventually make CNG and piped gas dearer for consumers.
Within hours of the RBI increasing the benchmark lending rate (repo) to a three-year high of 5.9 per cent, India’s banking sector giant SBI and largest mortgage lender HDFC raised their loan rates by 50 basis points. Other banks and NBFCs are likely to follow soon.
Since May, the central bank has raised the repo rate by 190 basis points in its fight against elevated inflation.
In view of the deteriorating global situation and domestic inflation, the RBI has lowered its GDP growth projection for the current fiscal to 7 per cent from its earlier forecast of 7.2 per cent.
The data for the eight core infrastructure industries showed that the growth in the segment dipped to a nine-month low of 3.3 per cent in August due to a decline in production of crude oil and natural gas.
Oil ministry’s Petroleum Planning and Analysis Cell (PPAC) has effected a steep 40 per cent hike in prices of natural gas, which is used to generate electricity, make fertiliser and is converted into CNG to run automobiles. This comes amidst firming up of energy rates globally.
Equity indices made an emphatic comeback after falling for seven straight sessions.
Overcoming a wobbly start, the 30-share BSE Sensex soared 1,016.96 points or 1.80 per cent to settle at 57,426.92. During the day, it rallied 1,312.67 points or 2.32 per cent to 57,722.63.
Similarly, the broader NSE Nifty climbed 276.25 points or 1.64 per cent to end at 17,094.35.
In the broader market, the BSE smallcap gauge jumped 1.45 per cent and the midcap index climbed 1.39 per cent on Friday.
Among the BSE sectoral indices, telecom rose 3.49 per cent, metal 2.66 per cent, financial services 2.36 per cent, realty 1.94 per cent and power 1.94 per cent.
Oil & gas index ended marginally lower.
The rupee extended its initial gains and settled 33 paise higher at 81.40 against US dollar on Friday.
Foreign institutional investors offloaded shares worth a net Rs 1,565.31 crore on Friday, according to data available with BSE.
On the macroeconomic front, the output of eight core infrastructure sectors grew 3.3 per cent in August — the lowest in nine months — as against 12.2 per cent in the year-ago period. The previous low was in November 2021 at 3.2 per cent. It stood at 4.5 per cent in July.
The production growth of eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — was 9.8 per cent during April-August this fiscal, compared to 19.4 per cent a year ago.
Crude oil and natural gas production contracted by 3.3 per cent and 0.9 per cent, respectively, during the month under review. The fertiliser output rose by 11.9 per cent against a contraction of 3.1 per cent in the same month last year.
Another set of government data revealed that the central government’s fiscal deficit touched 32.6 per cent of the annual target in the current financial year till August as against 31.1 per cent recorded a year ago.
In actual terms, the fiscal deficit — the difference between expenditure and revenue — was Rs 5,41,601 crore during the April-August period of this financial year.
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