Latest news with #SanjayMalhotra
Mint
11 hours ago
- Business
- Mint
RBI likely to carry out ‘jumbo' rate cut to boost India's credit cycle: SBI Research
The Reserve Bank of India (RBI) is expected to cut its key benchmark interest rates by 50 basis points in its upcoming June 2025 monetary policy committee (MPC) meeting, according to an SBI Research report released on Monday, 2 June 2025. 'We expect a 50-basis point rate cut in June'25 policy as a large rate cut could reinvigorate a credit cycle,' said the research agency in its latest report. 'Cumulative rate cut over the cycle could be 100 basis points,' they said. RBI is scheduled to hold its bi-monthly meeting starting Wednesday, 4 June 2025, and Governor Sanjay Malhotra will announce the MPC results on Friday, 6 June 2025. RBI, in its first policy meeting for the 2025-26 fiscal year, announced a 25-basis-point rate cut for the second consecutive time to its current level of 6 per cent and shifted its stance from 'Neutral' to 'Accommodative'. The research agency attributed its stance of a 'jumbo rate cut' to the receding domestic liquidity and financial stability concerns in the Indian economy. SBI Research suggested that the main focus of the upcoming policy should be keeping the domestic growth momentum intact. 'Domestic liquidity and financial stability concerns have receded. Inflation is expected to stay within tolerance band. Keeping the domestic growth momentum intact should be the main policy focus and provides the justification of a jumbo rate cut,' said the analysts at SBI Research in its report. India's credit growth is witnessing a slowdown to 9.8 per cent levels as of 16 May 2025, which is narrowing the gaps between the deposits and the advances in the economy, favouring the impact from liquidity, according to the research report. 'Slowdown in credit growth, to 9.8% as on May 16, 2025 and narrowing gap between deposits and advances have favorably impacted liquidity,' noted SBI Research. The agency expects core liquidity in the economy to be ₹ 5.3 lakh crore by the end of June 2025. 'Durable liquidity is likely to remain surplus in FY26,' they said. The report also said that the share of individuals in total credit maintained its rising momentum, at 47.8 per cent in March 2025, compared to 41.5 per cent in March 2020. This means more of the loans given out by the banks or other financial institutions are going to direct individual borrowers, rather than businesses or corporations. 'RBI is expected to revisit the liquidity framework in the current year,' said SBI Research in its report. IMF data suggests that India's GDP is expected to slow by 50 basis points due to rising protectionism and uncertainty. The downward economic projection applies to all major economies, as per the report. On the inflation front, the agency expects global headline inflation to decline at a slower-than-expected pace. 'Inflation in emerging economy is expected to moderate with latest reading for China suggesting negative inflation,' said the analysts in the report.
Reuters
13 hours ago
- Business
- Reuters
India's index-linked bonds see record foreign selling in May on profit-booking, currency swings
MUMBAI, June 2 (Reuters) - Foreign investors sold Indian government bonds included in global indexes for a second straight month in May, driven by profit-taking and currency volatility rather than a change in sentiment towards the country, several investors said. Foreign investors offloaded 123.2 billion rupees ($1.44 billion) of Indian bonds under the Fully Accessible Route in May, the highest since its 2020 launch, after selling 111.4 billion rupees in April. They have invested 1.20 trillion rupees in Indian bonds till March since June 2024, when Indian bonds were included in the JPMorgan emerging debt market index. "The recent outflows are best viewed through the lens of profit-taking after a strong run, rather than a shift in fundamental conviction," said Rong Ren Goh, portfolio manager at Eastspring Investments, which manages $256 billion of assets. Some headwinds, including geopolitical tensions and uncertainty over the new RBI governor's stance on FX policy, may have also led investors to trim exposure and rebalance portfolios, he added. The Indian rupee has grown more volatile over the past six months since new RBI Governor Sanjay Malhotra took charge in December, with implied volatility averaging 4.26%, up from 2.24% during the final six months of former governor Shaktikanta Das's tenure. A rise in U.S. Treasury yields due to fear of a wide budget gap and inflationary impact of President Donald Trump's tariff policies and a drop in Indian rate due to declining inflation have also narrowed the yield differential between the two markets. The spread between Indian and U.S. bond yields have collapsed to 21-year low of around 170 bps now, from 250 bps early November. "This (selling in Indian bonds) was not driven by skepticism towards India, but rather by shifts in global macro sentiment," Jean‑Charles Sambor, head of emerging markets debt at TT International Asset Management said, that manages $3.15 billion of assets across EM. "We do not see this (outflows) as a game changer. Sentiment towards Indian bonds is likely to improve as inflation continues to decline and there is more fiscal space," Sambor said, adding he remains constructive on rupee bonds and believes appetite for local currency bonds is returning. ($1 = 85.3790 Indian rupees)
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Business Standard
13 hours ago
- Business
- Business Standard
RBI may go for 'jumbo rate cut' of 50 bps on Friday: SBI research
The Reserve Bank of India (RBI) may go for a "jumbo rate cut" of 50 basis points on Friday to reinvigorate the credit cycle and counterbalance uncertainties, said SBI research report. RBI's rate-setting panel Monetary Policy Committee (MPC) will start deliberations on the next bi-monthly monetary policy on June 4 and announce the decision on June 6 (Friday). The central bank reduced the key interest rate (repo) by 25 bps each in February and April, bringing it to 6 per cent. The six-member MPC, headed by RBI Governor Sanjay Malhotra, also decided to change the stance from neutral to accommodative in its April policy. "We expect a 50-basis point rate cut in June 25 policy as jumbo rate cut could act as a counterbalance to uncertainty," said the research report from the State Bank of India's Economic Research Department 'Prelude to MPC Meeting - June 4-6, 2025'. It further said a large rate cut could reinvigorate a credit cycle. "Cumulative rate cut over the cycle could be 100 basis points," it added. The research report said that following the 50-bps repo rate cut by the RBI in February and April 2025, many banks have recently reduced their repo-linked EBLRs by a similar magnitude. Now, around 60.2 per cent of the loans are linked to external benchmark-based lending rates (EBLR) and 35.9 per cent are linked to the marginal cost of funds-based lending rate (MCLR). While the MCLR, which has a longer reset period and is referenced to the cost of funds, may get adjusted with some lag, it said. "We believe for the first time, liabilities are getting repriced faster in a rate easing cycle. Banks have already reduced interest rates on savings accounts to a floor rate of 2.7 per cent. Also, fixed deposits (FDs) rates have been reduced in the range of 30-70 bps since February 2025," the report said. Transmission to deposit rates is expected to be strong in the coming quarters, it added. The report noted that commercial banks' credit growth slowed to 9.8 per cent as of May 16, 2025, against last year's growth of 19.5 per cent.
Economic Times
14 hours ago
- Business
- Economic Times
India's index-linked bonds see record foreign selling in May on profit-booking, currency swings
Foreign investors sold Indian government bonds included in global indexes for a second straight month in May, driven by profit-taking and currency volatility rather than a change in sentiment towards the country, several investors said. ADVERTISEMENT Foreign investors offloaded 123.2 billion rupees ($1.44 billion) of Indian bonds under the Fully Accessible Route in May, the highest since its 2020 launch, after selling 111.4 billion rupees in April. They have invested 1.20 trillion rupees in Indian bonds till March since June 2024, when Indian bonds were included in the JPMorgan emerging debt market index. "The recent outflows are best viewed through the lens of profit-taking after a strong run, rather than a shift in fundamental conviction," said Rong Ren Goh, portfolio manager at Eastspring Investments, which manages $256 billion of assets. Some headwinds, including geopolitical tensions and uncertainty over the new RBI governor's stance on FX policy, may have also led investors to trim exposure and rebalance portfolios, he added. The Indian rupee has grown more volatile over the past six months since new RBI Governor Sanjay Malhotra took charge in December, with implied volatility averaging 4.26%, up from 2.24% during the final six months of former governor Shaktikanta Das's tenure. ADVERTISEMENT A rise in U.S. Treasury yields due to fear of a wide budget gap and inflationary impact of President Donald Trump's tariff policies and a drop in Indian rate due to declining inflation have also narrowed the yield differential between the two markets. The spread between Indian and U.S. bond yields have collapsed to 21-year low of around 170 bps now, from 250 bps early November. ADVERTISEMENT "This (selling in Indian bonds) was not driven by skepticism towards India, but rather by shifts in global macro sentiment," Jean-Charles Sambor, head of emerging markets debt at TT International Asset Management said, that manages $3.15 billion of assets across EM. "We do not see this (outflows) as a game changer. Sentiment towards Indian bonds is likely to improve as inflation continues to decline and there is more fiscal space," Sambor said, adding he remains constructive on rupee bonds and believes appetite for local currency bonds is returning. ($1 = 85.3790 Indian rupees) ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
15 hours ago
- Business
- Time of India
India's index-linked bonds see record foreign selling in May on profit-booking, currency swings
Foreign investors sold Indian government bonds included in global indexes for a second straight month in May, driven by profit-taking and currency volatility rather than a change in sentiment towards the country, several investors said. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Markets 1. India bond yields resume decline as all eyes on RBI decision this week Foreign investors sold Indian government bonds included in global indexes for a second straight month in May, driven by profit-taking and currency volatility rather than a change in sentiment towards the country, several investors investors offloaded 123.2 billion rupees ($1.44 billion) of Indian bonds under the Fully Accessible Route in May, the highest since its 2020 launch, after selling 111.4 billion rupees in have invested 1.20 trillion rupees in Indian bonds till March since June 2024, when Indian bonds were included in the JPMorgan emerging debt market index."The recent outflows are best viewed through the lens of profit-taking after a strong run, rather than a shift in fundamental conviction," said Rong Ren Goh, portfolio manager at Eastspring Investments, which manages $256 billion of headwinds, including geopolitical tensions and uncertainty over the new RBI governor's stance on FX policy, may have also led investors to trim exposure and rebalance portfolios, he Indian rupee has grown more volatile over the past six months since new RBI Governor Sanjay Malhotra took charge in December, with implied volatility averaging 4.26%, up from 2.24% during the final six months of former governor Shaktikanta Das's tenure.A rise in U.S. Treasury yields due to fear of a wide budget gap and inflationary impact of President Donald Trump 's tariff policies and a drop in Indian rate due to declining inflation have also narrowed the yield differential between the two markets The spread between Indian and U.S. bond yields have collapsed to 21-year low of around 170 bps now, from 250 bps early November."This (selling in Indian bonds) was not driven by skepticism towards India, but rather by shifts in global macro sentiment," Jean-Charles Sambor, head of emerging markets debt at TT International Asset Management said, that manages $3.15 billion of assets across EM."We do not see this (outflows) as a game changer. Sentiment towards Indian bonds is likely to improve as inflation continues to decline and there is more fiscal space," Sambor said, adding he remains constructive on rupee bonds and believes appetite for local currency bonds is returning. ($1 = 85.3790 Indian rupees)
