RBI Lowers Growth Target in India

123jump.com Staff
27 Jan, 2009
New York City

The fiscal deficit in India at the end of the current year is expected to rise to 5.9% of the GDP. The RBI holds rates and reserve ratios for banks and lowers the estimate of the economic growth rate to 7%. Stocks surged on the global mega mergers in pharmaceutical industries.

[R]10:00AM New York, 7:30 PM Mumbai- The fiscal deficit at the end of the current year is expected to rise to 5.9% of the GDP. The RBI holds rates and reserve ratios for banks and lowers the estimate of the economic growth rate to 7%.[/R]

The benchmark stock index rose in India as investors bought blue-chip stocks and on short covering ahead of the expiry of January 2009 series derivative contracts on Thursday.

Financial stocks, commodity and IT stocks gained.

In Mumbai, the BSE 30-share Sensex increased 3.8% or 329.73 to 9,004.08, rising above the 9000 level, CNX Nifty declined 5.3% or 150 to 2,679.

Of the stocks traded on BSE, 1,233 rose, 1,196 declined, and 66 remained unchanged.

Trading Statistics

Daily turnover on BSE stood at 42,867.49 crore rupees from 36,809.97 crore rupees on Friday last week.

Fiscal Deficit to Rise to 5.9% in Year to March

Reserve Bank of India reported today in its third quarter monetary review that the central bank’s fiscal deficit will soar to 5.9% of the country’s total economic output from 2.5%.

The RBI forecasts that this will translate to a deficit escalation from 1,50,310 crore rupees to 3,54,731 crore rupees. The central bank also lowered the estimate of the GDP to 60,12,400 crore rupees.

The RBI governor Dr Subbarao said if items such as future liability on account of oil and fertilizer bonds are included, the fiscal deficit will rise additional 1.1% of the GDP or 58,000 crore rupees.

The RBI forecasts that the tax cuts made to stimulate demand will cut the revenue of the central government by 36,074 crore rupee.

RBI Keeps Rates Unchanged

Separately, the RBI said it will leave the repo rate and the reverse repo rate unchanged, and revised downwards in growth forecast for the fiscal year ending March 2009 to 7% on a slowdown in industry and services.

The central bank says inflation by the end of the fiscal year under review will be lower than 7%.

Gainers & Losers

Reliance Industries gained 6.4% to 1,227.05 rupees and Oil & Natural Gas Corporation fell 3.8% as crude oil prices for March delivery edged up 52 cents to $46.25 per barrel.

Sterlite Industries rose 11.8% after it reported that net profit will slip 11.6% to 204.01 crore rupees in the third quarter to December.

Steel Authority of India increased 3.1% after its net profit fell 56.4% in the December quarter.

IT stocks increased. Wipro increased 5.8%, Infosys Technologies rose 4%, HCL Technologies gained 5.09% and TCS edged up 2.9%.

Auto shares gained. Tata Motors increased 3.9% on recent news that dealer network will be ready by the end of February.

NTPC climbed 6% after its net profit rose 26.5% to 2,250.91 crore rupees in the third quarter to December from the same period a year earlier.

Reliance Communication rose 7.2% despite a drop in its net profit by 9% to 397.04 crore rupees in the three months to December from 436.48 crore rupees in the previous quarter.

Hindustan Unilever gained 2.5% after reporting that net profit declined 2.5% in the third quarter ending December.

Cadila HealthCare rose 2.6% after its net profit rose 14.5% in the December quarter from the previous three months.

NTPC jumped 5.6% after its net profit rose 26.5 % to 2,250.91 crore rupees in the third quarter to December.

Larsen & Toubro fell 0.4% after it shored stakes in Satyam Computer Services from 4.5% to 12%.

REI Agro fell 2.5% after its net profit declined 92.3% to 2.0389 crore rupees in the three months to December from the same period a year ago.

Divi''s Laboratories shed 8.5% after the company reported an 18.1% fall in net profit to 82.42 crore rupees in the three months to December from the comparable year ago period.

Sun TV Network climbed 4.4% after the company reported a 9.7% rise in net profit to 112.24 crore rupees in the third quarter ended December from a year earlier.

Asian Paints fell 12.7% after the company reported a 53.5% drop in net profit to 50.11 crore rupees in the review period.