UPDATE 2-Indian stocks, bonds cheer RBI decision to hold rates; focus on Fed
Here you can find all the latest breaking forex and currency news about UPDATE 2-Indian stocks, bonds cheer RBI decision to hold rates; focus on Fed including currency analysis and forecasts, live foreign exchange rates, central bank interest rates, and currency trading strategies from experienced fx traders and forex platforms.
By Swati Bhat
MUMBAI, Dec 18 (Reuters) - Indian government bonds rallied while stocks gained on Wednesday after the central bank surprised investors by keeping rates on hold, but it kept the door open to more rate increases should a recent surge in inflation fail to ease.
Financial markets had geared up for a quarter percentage point increase in key rates after record retail price inflation and a 14-month high reading on the wholesale price index. These prompted 39 of 43 respondents in a Reuters poll to predict a 25 bps hike on Wednesday.
The central bank kept talking tough on inflation despite unexpectedly holding its policy interest rate unchanged, saying it would be ready to act even if the country struggled to raise its low growth rate.
The benchmark BSE share index and the broader NSE closed up 1.2 percent and 1.3 percent, respectively.
The benchmark 10-year bond yield fell as much as 15 basis points on the day to 8.76 percent after the policy review. It ended down 13 bps at 8.78 percent.
The partially convertible rupee closely mirrored moves in shares but weakened towards the end of trade. It closed at 62.09/10 per dollar, weaker than its previous close of 62.01/02.
'We see stability at the current level in bonds with buying appetite given lower supplies in coming months,' said Shakti Satapathy, a fixed income strategist at AK Capital.
'The onus would now largely be towards the Fed announcement and the core CPI trajectory in the coming months. As both of the above triggers have been discounted in the market, we see a near-term chaos if the Fed announces something beyond expectations,' he added.
The benchmark 5-year overnight indexed swap rate closed down 10 bps at 8.40 percent while the 1-year rate ended 12 bps lower at 8.44 percent.
Many analysts were surprised by the RBI decision.
'It is completely unexpected given the liquidity in the system as well as the inflation trajectory,' said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.
'I think it is just postponement of action, because the policy clearly says they may take action any time, even in the interim between two policies, if the situation warrants,' she added.
The U.S. Federal Reserve's two-day meeting ends late on Wednesday amid fears globally that the central bank will soon move to cut its monetary stimulus.
Worries about tapering have sparked foreign investor sell-off in Indian markets since they emerged in May, hitting bonds in particular.
(Editing by Richard Borsuk and Robert Birsel) Keywords: INDIA MARKETS/POLICY
([email protected])(+91-22-61807353)(Reuters Messaging: [email protected])(twitter.com/swatibhat 22)
COPYRIGHT
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The article above is about breaking forex and currency news regarding UPDATE 2-Indian stocks, bonds cheer RBI decision to hold rates; focus on Fed, if you have any question about it. Please contact us by using the link below. Thanks for your patience.
- Japanese Yen Gains, Nikkei Falls as BOJ Leaves Policy Unchanged
- Chinese Business Sentiment Contracts for the First Time in 4 Months
- Dismal UK Retail Sales to Spur Another Test of GBP/USD Resilience
- Forex-Webinar:-FOMC-Minutes-Reinforce-Hike-Forecast
- Trading Video: Dollar Fails to Rally on Hawkish FOMC, Equities Rally
- Among Top Themes, Where is the Risk Most Potent: Fed Hike, China, EM?
- EUR/USD Technical Analysis: Looking to Short on Bounce
- US Dollar Declines as FOMC Minutes Bring Nothing New to the Table
- US DOLLAR Technical Analysis: USD Holds Support on FOMC Minutes
- WTI Crude Oil Price Forecast: What Now That $40bbl Broke?
- Fingertrp Scalping with James Stanley (Using Tradingview Charts)
- EUR/USD Risks Fresh Monthly Lows on Hawkish FOMC Minutes
- Analyst Pick - Kiwi & CAD in Focus
- Price & Time: USD/CAD ? It?s Showtime
- GBP/USD Ranges Ahead of FOMC Minutes
- President Xi Warns That China Faces Considerable Downward Pressure
- FOMC Minutes Later Today - USD Set for October 28 Redux
- Silver Price Is Targeting Its Yearly Low
- FTSE 100: Commodity Markets Wants to See The FTSE 100 at 6040
- DAX 30: Momentum Slows Down, FOMC Minutes on Tap
- US Dollar May Extend Gains as Fed Minutes Foreshadow Rate Hike
- Copper Surplus Faces Falling Premiums; Gold Slides before Fed Minutes
- China Real Estate Market Recovery Slows in October
- Traders Not as Confident of Fed Hike as Markets, Economists
- EUR/GBP Technical Analysis: Euro Drops to 3-Month Low
- Dollar Unmoved After China Treasury Holdings Hit a 7 Month Low
- Can Dollar Climb Continue After FOMC Forecast Shift?
- Dollar’s CPI Rally Lacking, Stall in Risk Raises Yen Crosses Appeal
- NZD/USD Technical Analysis: Short Trade Activated Sub-0.65
- Will the DAX Crack or Cower from Resistance?