The exchange decided to annul all the derivatives trades transacted during the ‘Muhurat’ trading due to large movement of the Sensex futures
Mumbai: The Samvat 2068 began on a sombre note as the country’s premier stock exchange Bombay Stock Exchange (BSE) on Wednesday decided to annul all the derivatives trades transacted during the ‘Muhurat’ trading due to large movement of the Sensex futures, reports PTI.
“Trading members of the exchange were informed that due to large movement of Sensex futures observed during the special session conducted as Muhurat trading for Diwali, BSE has decided to annul all the derivatives trades done on 26 October 2011 under Bye Law 1.46 of the derivatives segment,” BSE said in a statement here.
The exchange said that it has also suspended a member broker from trading any further in the proprietary position on the exchange in all segments and has launched a detailed investigation into the matter.
Meanwhile, the BSE Sensex shed most of intraday gains on ‘Muhurat’ trading of Samvat 2068 and closed on a flat note with positive bias in the equity segment.
At the traditional Muhurat trading session, the BSE Sensex opened about 70 points up, but the gains petered out after a while. The index closed at 17,288.83 points, barely 33.97 points above the previous day.
Earlier, Lakshmi Pooja at BSE was graced by personalities from the fields of broking, corporates and Bollywood. Actress Mahima Choudhary was present at the exchange for the ‘Opening Bell”.
Banks are comfortable with the liquidity now. Banks will not be desperate to raise rates,” SBI chairman Pratip Chaudhuri said after RBI hiked policy rates by 25 basis points
Mumbai: Within hours of the Reserve Bank of India (RBI) deregulating savings rate, private lender Yes Bank on Tuesday hiked its saving rate by a hefty 2% even as some leading bankers said they were not in a hurry to take a call as the liquidity position is comfortable, reports PTI.
“We are not in a hurry. We will see how it (the rate hike) pans out. We don't see any pressure now (on liquidity).
Banks are comfortable with the liquidity now. Banks will not be desperate to raise rates,” SBI chairman Pratip Chaudhuri said after RBI hiked policy rates by 25 basis points.
Yes Bank, however, was quick to react and raised savings rate by 200 basis points to 6%. Further, the bank also increased its base rate or minimum lending rate by 25 basis points to 10.50% with immediate effect.
As for SBI, Mr Chaudhuri said, “Right now there is so much liquidity that we are thinking of downsizing on the liquidity.”
The largest private sector lender ICICI Bank said it would watch the situation for sometime before taking a decision on rate revision.
“The rates would not go up immediately. Everybody is going to watch before taking any decision on rate hikes,” ICICI Bank managing director and chief executive Chanda Kochhar said.
HDFC Bank managing director and chief executive Aditya Puri said, “Lending rates will not go up till the deposit rates do so. At the moment it is in a comfortable situation.”
Oriental Bank of Commerce executive director SC Sinha, however, said, “Banks are likely to increase both lending and deposit rates following the RBI action. There could be a minimum 25 basis point rise in lending rate.”
“Changing the policy stance when inflation is still far above the tolerance level entails risks to the credibility of the Reserve Bank’s commitment to low and stable inflation,” the apex bank said in its policy review document.
Continuing with its tight monetary policy stance, the Reserve Bank of India (RBI) in its quarterly policy review today, raised interest rates by 25 basis points (bps). Following the rate increase, the 13th since March 2010, the repo rate (the rate at which the RBI lends money to banks) now stands at 8.5%, and the reverse repo (the rate at which the RBI borrows from banks) rate has gone up to 7.5%. The central bank has, however, kept the cash reserve ratio (CRR) unchanged at 6%.
The series of rate hikes has cumulatively increased interest rates by 525bps in the last 18 months.
However, despite the RBI's tightening measures so far, the country's headline inflation was 9.72% in September, the 10th straight month where it has remained above 9 percent.
The RBI has also lowered the gross domestic product (GDP) growth projection to 7.6% from 8% in 2011-12. It added that inflation, which has been over the 9% mark, is expected to fall from December and has pegged it at 7% by March 2012.
In a major policy decision, governor D Subbarao also deregulated savings bank deposit rates with immediate effect.
"Changing the policy stance when inflation is still far above the tolerance level entails risks to the credibility of the Reserve Bank's commitment to low and stable inflation," the policy document said, even as it admits that growth momentum has slowed down.
Commenting on the rate hike, bankers opined that retail and corporate credit, including home and auto loans, are set to become costlier.
"Banks are likely to increase both lending and deposit rates following the RBI action. There could be a minimum 25bps rise in lending rates," Oriental Bank of Commerce executive director SC Sinha said.
Echoing Mr Sinha's views, IDBI Bank executive director RK Bansal said, "Lending rates would certainly go up on two counts-one, RBI has raised policy rates and second deregulation of deposit rates on savings bank accounts." G Chokkalingam, group CIO, Centrum Wealth Managers said, "This signals peaking out of the current interest rate cycle. Deregulation of savings bank account interest rate is positive for the old private sector banks like Karur Vysya Bank and large private sector banks like YES Bank, which have quite low CASA (current account and savings account) ratio."
According to Abraham Chacko, executive director, Federal Bank, "The 25bps hike in repo and reverse repo is in line with expectations. More importantly, there are indications that this is the last hike by the RBI for the year. A 25bps hike would not affect corporate borrowers much, but could have an adverse effect on retail borrowers, if the hike is passed on to them."
A few players in the insurance industry also feel that further rate hikes may not be on the cards. Sandeep Nanda, chief investment officer, Bharti AXA Life Insurance, said: "The indication of a pause in the rates going forward has fulfilled hopes that the credit cycle has in all probability peaked. The likelihood of further rate hikes is relatively low keeping in view that inflation would decline beginning December 2011, that past monetary policy actions have started taking effect and developments in the global scenario have started affecting growth. I expect rate sensitive sectors to perform better henceforth.
"Given the current liquidity environment, the deregulation of savings account rates would likely move up the interest cost curve for the entire banking system and the end-borrowers. To that extent, the policy may lead to hikes in bank base rates, increase interest-rate volatility and also deal a blow to margins of banks with high savings deposits," Mr Nanda added.
Rajiv Kumar, secretary general of FICCI said, "A clearer statement on preventing a rapid depreciation of the rupee by the governor would have been especially welcome. It is heartening to see that the RBI is finally giving some importance to supply-side measures and talking about the need for raising the potential rate of growth through the implementation of structural reforms.
Mr Kumar added, "The announcement of a 1% subsidy on home loans by the government which came almost at the same time at the Credit Policy announcement will surely help in arresting the further decline in demand for new housing. Overall, FICCI is relieved to see a halt in the cycle of interest rate increases and urges the government to take further steps that will restore investors' confidence in coming months." However, FICCI feels that the inflation rate of 7% projected by the apex bank at the end of March 2012 could possibly be an underestimation. "This is based almost entirely on the expectation that the higher base effect will bring down the inflation rate in the coming months," said the FICCI statement.