Business News at 05:30 pm on 8th December 2023

Let’s begin. The Reserve Bank of India’s Monetary Policy Committee headed by Shaktikanta Das today decided to keep the policy rate unchanged at 6.5 per cent for the fifth time in a row. The MPC maintained the policy stance of ‘withdrawal of accommodation’ by a majority of 5 out of 6 members. The rate increase cycle was paused in April after six consecutive rate hikes, aggregating to 250 basis points since May 2022. As inflation remains above RBI’s target of 4 per cent and the global economic environment remains fragile even as India’s growth has been remarkable, the RBI wants to stay ready to act when required, the RBI Governor said.

In the same MPC meet, the Reserve Bank of India projected that inflation for FY24 will be at 5.4 per cent, this is in sync with the overall estimates. RBI Governor Shaktikanta Das said that the monetary policy to remain disinflationary. The Governor further added that the target of 4% inflation has not been achieved yet, and the headline inflation remains characterised by volatility, according to Das. The inflation had declined to 4.87 per cent in October and the November print of inflation is expected to be released next week. The government has mandated the RBI to keep CPI inflation at 4 per cent with a margin of 2 per cent on either side.

The RBI also projected the real Gross Domestic Product growth at 7% from 6.5%. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das on Friday also projected the real GDP growth for next financial year 2024-25. In the last RBI meeting held on October 6, Governor Das projected real GDP growth for FY24 at 6.5%, with specific quarter-wise estimate. He highlighted steady expansion in urban consumption and signs of revival in rural demand. Factors such as sustained buoyancy in services, consumer and business optimism, government’s focus on capital expenditure, healthy bank and corporate balance sheets, and supply chain normalization were identified as contributors to domestic demand conditions.

In market, Tata Power, one of the leading players in the Indian power sector, has been on an impressive upward trajectory since the onset of the new financial year, 2023-24. The company’s shares, which found a bottom at approximately Rs 185 per share in March 2023, have witnessed a remarkable ascent, consistently reaching new highs. Tata Power’s shares opened strong on the National Stock Exchange on Thursday’s day at Rs 295 per share and soared to a new lifetime high of Rs 332.15 per share, marking an astounding near 80% return in the current fiscal year. This surge has propelled Tata Power into an elite league, as it becomes the sixth Tata Group company to surpass the Rs 1 lakh crore market capitalization mark during Thursday’s trading session.

Over to economy. India will address the issue of the European Union’s plan to impose a carbon tax on certain imported goods, Commerce and Industry Minister Piyush Goyal on Friday said, adding, quote, “I will retaliate if required,” unquote. The Carbon Border Adjustment Mechanism or carbon tax, a kind of import duty, will come into effect from January 1, 2026. However, from October 1 this year, domestic companies from seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products, will have to share data with regard to carbon emissions with the EU. According to a report of the think tank Global Trade Research Initiative, CBAM will translate into a 20-35 per cent tax on select imports into the EU, starting January 1, 2026.

Next up, banking. In a major decision, the RBI today also announced to raise the UPI payment limit to hospitals and educational institutions to Rs 5 lakh from Rs 1 lakh presently and hiked the cap for e-mandates for recurring payments to Rs 1 lakh. Unveiling the December bi-monthly monetary policy, Reserve Bank Governor Shaktikanta Das said the limit for various categories of Unified Payments Interface transactions has been reviewed from time to time. He said, quote, “It is now proposed to enhance the UPI transaction limit for payment to hospitals and educational institutions from Rs 1 lakh to Rs 5 lakh per transaction,” unquote. The enhanced limit will help consumers make UPI payments of higher amounts for education and healthcare purposes.

Lastly, let’s see how the share market performed today. Indian benchmark indices ended higher in the volatile session on December 8 with Nifty around 20,950. HCL Technologies, JSW Steel, LTIMindtree, Apollo Hospitals and Infosys were among the top gainers on the Nifty, while losers were Adani Enterprises, ITC, Adani Ports, Hero MotoCorp and Britannia Industries. On the sectoral front, FMCG, oil & gas and power indices down 1 percent each, healthcare and auto down 0.5 percent each. Om the other hand, bank, Information Technology and Realty up 0.5-1 percent. BSE midcap index ended marginally lower, while smallcap index fell 0.5 percent.