India Holds Key Rates, First Pause in Nine Months

Chandrasekhar Atreya
16 Dec, 2010
New York City

Mumbai stocks gained in late trade after Reserve Bank of India left interest rates unchanged and eased liquidity and bond yields fell. The RBI left cash reserve ratio unchanged at 6%. Indirect tax collections reach 66% of the target in the fiscal year to November.

[R]5:00 PM Mumbai, 8:30 AM New York – Mumbai stocks gained in late trade after Reserve Bank of India left interest rates unchanged and eased liquidity and bond yields fell. The RBI left cash reserve ratio unchanged at 6%. Indirect tax collections reach 66% of the target in the fiscal year to November.[/R]

The BSE Sensex in Mumbai gained 1.1% or 217.08 to close at 19,864.85. The CNX Nifty on the National Stock Exchange closed at 5,948.75 after gaining 56.45 or 1%.

The rupee closed at Rs 46.01 per dollar in Mumbai today.

The Reserve Bank of India left key interest rates on hold today as expected, after six increases since March 2010. However, the central bank cut liquidity ratio to 24% from 25% effective December 18.

The RBI left the reverse repo rate at 5.25% and repo rate at 6.25% and cash reserve ratio was left unchanged at 6%.

India’s food price index rose 9.46%, while fuel price index climbed 10.6% from a year ago to December 4 according to the latest government data showed on Thursday.

In the prior week the food price index increased at 8.69% and fuel price index was rose 9.99% respectively.

The direct selling business in India is expected to reach about Rs 7,100 crore by 2012-13 on the back of increased consumer spending and change in lifestyle, according to a report prepared by Ernst & Young for Indian Direct Selling Association.

“An increase in consumption of consumer goods by the average Indian, coupled with the rising awareness of health and wellness among Indian households is a key growth driver. This and other strong drivers will enable the sector to reach Rs 7,100 crore by 2012-13,” the report said.

Chinese Premier Wen Jiabao said on Wednesday that China may give greater access to India’s IT, pharmaceutical and agricultural industries.

Chinese companies will sign more than $16 billion worth of deals, Wen told business leaders at the India-China Business Cooperation Summit, during his three-day visit to India.

Indirect tax collections till November rose 42.3% to Rs 2.07 lakh crore an increase of 42.3% from the corresponding period last year.

“In the current year tax collections during the April-November period constitute 66.3% of the overall target of Rs 3.13 lakh crore as against 54.5% for last year, an official statement said.

Coal India, the world’s largest coal producer, is in talks with Indonesia’s Sinar Mas Group for acquiring coal mines in the island nation, a top company official said Wednesday.

“Talks are narrowing down with Indonesia’s Sinar Mas and also with U.S.-based Massey Energy for acquiring assets in their respective countries,” said Partha S. Bhttacharyya, Chairman and Managing Director of Coal India at a SCOPE event in New Delhi.

U.S. concerns about India’s nuclear liability law have been addressed by New Delhi signing an international treaty that assures a level playing field for U.S. companies, according to senior official.

“I think they have been,” Assistant Secretary, Bureau of South and Central Asian Affairs, Robert Blake said in response to a question during a conference call with journalists on Wednesday.