Bonds, Currencies & Commodities
No immediate hike in lending rates, say bankers

Despite a more-than-expected hike in the Cash Reserve Ratio (CRR), banks today ruled out any immediate hike in lending rates

Retail and corporate borrowers can breathe easy as bankers today said that an immediate hike in lending rates is unlikely even as the RBI tightened money supply by raising the CRR by 75 basis points, reports PTI.

"There may not be an immediate hike in the lending rates as liquidity at the moment is sufficient. We need to see how the liquidity conditions pan out. Going forward, as the credit off-take picks up, there may be an increase in rates," State Bank of India’s chief financial officer S S Ranjan told PTI.

IDBI Bank director Sushil Munhot echoed his sentiments. "I doubt if there would be a hike in interest rates immediately as there is enough liquidity in the system,” he said.

According to Corporation Bank executive director Asit Pal, there would not be any change in prime lending rate as there is sufficient liquidity in the system and credit off-take is also muted at this point of time. However, Mr Pal said that there could be some spike in inter-bank call rate.

Shubhada Rao, chief economist at Yes Bank, said that rate hikes would depend on the overall growth dynamics. "Rate hikes are unlikely in the immediate horizon as economic growth is still on the agenda. I don't see banks upping their interest rates—at least, not yet," Mr Rao said, adding that liquidity was comfortable and would remain comfortable even after the two-tranche CRR hike announced today.

In its third quarter monetary policy review, the RBI raised CRR by 75 basis points to 5.75% to mop up Rs36,000 crore from the system. However, the apex bank retained short-term lending and borrowing rates at 4.75% and 3.25%, respectively.


SAIL may cut steel prices soon

The steel ministry had expressed concerns on increase in steel prices by domestic firms, including SAIL and Tata Steel, which own captive reserves of iron ore and coking coal

State-run Steel Authority of India Ltd (SAIL) on Thursday said that it may cut prices of some of its products in the near future, reports PTI. The company last week had raised prices of flat and long products by Rs1,500.

"Since long steel product prices have gone up to a certain level, there may be some correction in the category in near future," SAIL chairman SK Roongta said when asked if the company will revise prices of its products soon.

Long steel products are mainly consumed by construction and infrastructure sectors.

It is learnt that the steel ministry had also expressed concerns on increase in steel prices by domestic firms, including SAIL and Tata Steel, which own captive reserves of iron ore and coking coal.

Many steel companies had cited increase in input cost besides the demand surge, for the price increase. Iron ore prices, which had fallen below $50 a tonne last year, are hovering at $100 a tonne at present.

However, Mr Roongta said, "Input cost does not determine steel prices. It’s market fundamentals which decide prices."

On prices of flat steel products, which are primarily consumed by automobile and consumer durables industries, he said, "Prices are governed by international trends and international prices are rising."


Sugar prices surge to all-time high at Rs4,250/quintal

Demand for the ongoing marriage season and approaching festival of 'Makar Sakranti' might further boost buying activity in the face of tight supply

Sugar prices on Tuesday rose to Rs4,250 per quintal at the wholesale market on increased buying for the current festival and marriage season amid widening demand-supply gap, reports PTI.

The sweetener, which is already trading double at Rs41 per kg in the retail market over the last one year, is likely to scale more heights as demand for the commodity rose sharply during the last fortnight among bakers and hoteliers for major events like Christmas and New Year, market analysts said.

They said that the demand for the ongoing marriage season and approaching festival of 'Makar Sakranti' might further boost the buying activity in the face of tight supply.

As per the consumer affairs ministry, sugar prices have gone up to Rs 41 per kg in the local market due to a demand-supply gap.

Traders at the Delhi wholesale market said the sweetener might become more costlier as it has risen to Rs4,150-Rs4,250 per quintal in bulk trading against Rs3,590-Rs3,700 per quintal on 19th December.

They said there is restricted supply from mills on account of a fall in production, while bulk users like soft drink manufacturers and retailers have placed more orders.

Sugar medium and small grade prices jumped further by Rs100 each to Rs4,150-Rs4,250 and Rs4,140-Rs4,240 a quintal respectively. It had gained Rs200 in the previous session.

Similarly, the sugar mill-gate prices, at which the companies sell from factories without duty, also rose in the range of Rs100 to Rs70 per quintal.

The sugar from Kinoni and Mawana mills rose by Rs80 and Rs70 to Rs4,000 and Rs3,970 per quintal respectively. Dorala mills rate rose by Rs100 to Rs3,980 per quintal.

A senior official with a leading sugar firm said that the rise in domestic price is in sync with global prices, which touched $718 (Rs33,229) a tonne in London.

The continued restriction imposed by the Uttar Pradesh government on the movement of imported raw sugar also has a bearing on the recent spurt in sugar prices, he added.

Domestic sugar companies, which had contracted to import over five million tonnes of raw sugar till 15th December have gone slow on further contracts, even though the country needs another two million tonne to meet the demand-supply gap.

Sugar production from domestically-grown sugarcane is pegged at 16 million tonnes, while annual demand is 23 million tonnes. The gap is being met through imports.

Mill delivery medium and second grade followed suit and edged up by the same margin at Rs4,050-Rs4,150 and Rs4,040-Rs4,140 per quintal.

Following are today's rates in Rs per quintal: Sugar ready M-30 Rs4,150-Rs4,250 and S-30 Rs4,140-Rs4,240; Mill delivery M-30 Rs4,050-Rs4,150 and S-30 Rs4,040-Rs4,140.

Sugar mill gate prices (excluding duty): Kinonni Rs4,000, Asmoli Rs3,910, Mawana Rs3,970, Titabi Rs3,900,Thanabhavan Rs3,890, Budhana Rs3,890, Dorala Rs3,980.


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