Interest rates set to rise, signals RBI

[alok agarwal]

 

 

   Interest rates are likely to start rising soon. This was indicated by the second quarter review of the monetary policy, 2009-10, unveiled by RBI governor D Subbarao on Tuesday. He said in the light of rising inflationary pressure, which is projected to touch 6.5% by March 2010, the monetary policy’s priority would be to contain the inflationary expectation.
   The RBI left policy rates like repo and reverse repo—the rates at which it lends to and accepts money from banks—and CRR—the percentage of deposits banks are supposed to keep with it—unchanged.

Sensex sheds 387 pts, closes at 6-week low


Mumbai: Across-the-board selling on Dalal Street shaved off nearly 400 points from the BSE sensex on Tuesday. Real estate stocks led the fall after RBI indicated there were signs of an unwarranted price rise in the sector and decided to rein in banks’ exposure to the commercial real estate sector by hiking risk weight for loans to this segment. Metal and banking stocks also witnessed strong profit taking as foreign funds continued to sell.
   The sensex opened the day weak on the back of a 100-plus points fall in the Dow Jones Index on Monday night. But the selling started after RBI’s policies were made public at 11.15 am, which indicated the central bank was slowly on track to exit the easy money policy that it had embarked on about a year ago, including tightening of money flow to the real estate sector, dealers said.
   At close, the sensex was down 387 points at 16,353, a six-week closing low. Since the Diwali-day high, the index is now down 1,100 points. Investors were left poorer by Rs 1.5 lakh crore with BSE’s market capitalisation now at Rs 54.9 lakh crore.
   Among the real estate majors, DLF lost 6.6% to Rs 402, Unitech was down 7.7% to Rs 86, while HDIL shed 8.7% to Rs 340. The panic selling in real estate stocks led BSE’s
Realty Index ending 6.2% off.
   FIIs continued to sell with the day’s net outflow at Rs 549 crore. Domestic funds, however, were net buyers at Rs 142 crore. In the last five sessions, on a net basis, FIIs have taken out nearly Rs 2,050 crore from the market.
   With the dollar appreciating against most major currencies, institutional dealers said.

Re near 47 to $

Mumbai: The Indian currency ended 28 points weaker against the US dollar at 46.93 mainly on the back of weakness of Asian currencies against the greenback and continuous selling by foreign funds. Rupee’s close was near its four-week closing low. Despite the day’s losses, the rupee is still stronger than the 48.11 level it was at a month ago. TNN