World
US Fed Reserve may raise interest rates by midyear
In a move that would likely impact both emerging markets like India and advanced economies, the US central bank Wednesday dropped an assurance to be "patienta" in raising interest rates and signaled the hike could come by mid year.
 
But in a statement issued after a two-day meeting of its policy-making committee, the Federal Reserve also emphasised that it might still delay the decision to raise the rates for the first time since the 2008 financial crisis, until later this year.
 
The Fed's announcement moved the central bank to the verge of ending a period of more than six years in which it has held short-term interest rates near zero.
 
"Just because we removed the word patient from the statement doesn't mean we are going to be impatient," Fed chairperson Janet Yellen said at a press conference here at the end of Federal Open Market Committee's (FOMC) two-day meeting.
 
In a statement issued after the meeting, the committee said it will be appropriate to tighten "when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."
 
The central bank stressed that it has not decided on the timing of the initial increase and that action is "unlikely at the April meeting."
 
"The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective," it said.
 
Striking an optimistic note about the economic outlook for the US, the committee said it "expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace."
 
The stock market surged on the news. The Dow was falling over 100 points before the Fed statement and is now over 100 points higher.
 
Dropping "patienta" gives the Fed more options on when it wants to raise interest rates. While the expectation is for an initial rate hike in June, the Fed has repeatedly said that it will only take action if the economy stays healthy, CNN said.
 
"Removing the word 'patience' simply gives the Fed flexibility," it said citing Greg Valliere, chief political strategist at Potomac Research Group.
 
The key factors the Fed will be watching as it decides when to raise rates are hiring, inflation, economic growth and the increasingly valuable -- perhaps too valuable -- US dollar, CNN said.
 
Ahead of the Fed meeting, IMF Managing Director Christine Lagarde had warned that emerging markets like India must prepare for the impact of a rise in US interest rates.
 
In a speech at Reserve Bank of India in Mumbai Tuesday, she also warned that markets could be heading for a repeat of the 2013 "taper tantrum."
 

User

Maharashtra to scrap Local Body Tax
Maharashtra Finance Minister Sudhir Mungantiwar on Wednesday announced the scrapping of the contentious Local Body Tax (LBT) while presenting in the state assembly a Rs.198,000 crore budget for 2015-16 that has a deficit of Rs.3,070 crore and a plan size of Rs.54,999 crore.
 
The LBT is scheduled to be scrapped from August 1 and the loss of around Rs.6,875 to the civic bodies, barring Mumbai, will be compensated by enhancing the Value Added Tax (VAT) rate across the state, he said.
 
Presenting a budget with focus on infrastructure, irrigation and tackling the agrarian crises in the state, Mungantiwar refrained from imposing any significant tax burden on the people.
 
However, he announced a premium on the additional floor space index availed by builders for construction purposes.
 
An allocation of Rs.109 crore has been made for the proposed Mumbai Metro 3 Project, which is currently facing stiff opposition from the people likely to be displaced and apprehensions of cutting down many trees in the city.
 
The minister said the budget was not based on expenditure but was target-oriented and important for tribals, farmers and minorities, poor and downtrodden.
 
Among the major highlights of the proposals are: freeing 223,000 farmers who have availed private loans from moneylenders, completing on priority 38 pending irrigation projects with an allocation of Rs.7272 crore, seed bank to preserve seeds traditionally used by the farmers in the state and Rs.1,000 crore allocation for water conservation projects to combat drought under Jalyukt Shivaj Yojana.
 
Mungantiwar announced a Rs.2,413 crore project to build rural roads in the state, an Aadmar Adarsh Gaon Yojana on the lines of Prime Minister Narendra Modi's scheme of each MPs adopting villages and plans to overhaul the Maharashtra State Road Transport Corporation.
 
For Mumbai, an amount of Rs.100 crore has been allocated for the grand memorials for Chhatrapati Shivaji in the Arabian Sea off the city coast and another for Dr. B.R. Ambedkar in central Mumbai, free WiFi at certain places in Mumbai under a tourist promotion scheme, a 1000-bed super-speciality hospital to be constructed in the campus of Sir J.J. Group of Hospitals and constructing a war memorial for Paramvir Chakra winners.
 
The state will construct 100,000 homes costing Rs.884 crore for the poor, an amount of Rs.268 crore would be spent on the Smart Cites Project, a skill development scheme named after the late Pramod Mahajan to come up, a school of planning and architecture in Aurangabad, special schemes for minority-dominated towns of Bhiwandi, Miraj and Malegaon.
 
Women earning upto Rs.10,000 per month will be exempted from paying profession tax, a five percent tax will be levied on mixed spices, taxes on labbooks, workbooks and graphbooks for students waived off, tax on LED bulbs slashed from 12.5 percent to five percent.
 
A biometric system of monitoring attendance for students and teachers in government-aided schools has been proposed and a state-evel 'Mazi Kanya, Bhagyashree' on the lines of the centre's 'Beti Bachao, Beti Padhao Scheme' will be introduced.
 
Chief Minister Devendra Fadnavis welcomed the budget proposals terming them as growth oriented and with many positive schemes for the farming community.
 
Maharashtra Congress President Ashok Chavan criticised the budget for making a shower of empty promises, questioned how the growth rate which stood at 8-10 percent for 15 years came down to 5.7 percent in the 138 days of the BJP-Shiv Sena rule.
 

 

User

Nifty, Sensex moving sideways; Bank Nifty in an uptrend still – Wednesday closing report

Nifty should close above 8,700 to gain momentum

 

We had mentioned in Tuesday’s closing report that the NSE’s CNX Nifty may record more gains if it manages to close above 8,750. The 50-share index opened below this level and moved lower. It tried reviving which made it reach yesterday’s close. However, the benchmark lost its strength and moved lower. Nifty managed to stay above the previous day’s low.
 
The S&P BSE Sensex opened at 28,767 while Nifty opened at 8,743. Sensex moved in the range of 28,547 and 28,807 before closing at 28,622 (down 114 points or 0.40%). Nifty moved from the level of 8,664 to 8,747 and closed at 8,686 (down 37 points or 0.43%). Bank Nifty continued closing in the green today. Bank Nifty opened at 19,080 and hit a high of 19,234 from the low of 18,937 and closed at 19,147 (up 89 points or 0.47%). NSE recorded a volume of 92.14 crore shares. India VIX rose 2.55% to close at 15.5125.
Telecom spectrum auction, which started on 4 March 2015 has fetched the Indian government Rs1.07 lakh crore up to 17 March 2015. Majority of service areas are going at a premium over reserve price. There is still spectrum, which is yet to be sold.
 
Christine Lagarde, Managing Director of the International Monetary Fund (IMF) had said that the Narendra Modi government’s commitment to broadening access to formal finance to all segments of the population through the ambitious Jan Dhan Yojana is impressive and so are the results, which were achieved in just a few months.
 
Minister of State for Civil Aviation Dr Mahesh Sharma in a written reply in Rajya Sabha stated said that the Government is concerned over financial health of all airlines since fuel constitutes about 40-50% of cost of operation of an airline. Ministry of Finance was requested to include aviation turbine fuel (ATF) under declared goods, Sharma said. State governments have also been requested to reduce VAT on ATF in their respective states, he added.
 
Improvement in the asset quality of Indian banks and growth in credit offtake is likely to take more time as the problems in mining and infrastructure sectors are yet to be resolved, rating agency S&P said today.
 
The Business Outlook survey, conducted by financial information provider Markit, showed that companies in India do not seem to be very optimistic about production growth in various sectors over the next year. According to a survey conducted in February, their confidence has grown at the lowest pace in a year.
 
The Indian government may announce a 10% cut in domestic natural gas price to $5.02 per million British thermal unit (mmbtu) effective 1st April, in line with the global decline in the price of liquefied natural gas.
 
India's exports grew marginally by 0.88% to $286.58 billion during the April- February period of the current fiscal, government said today.
 
Market regulator SEBI plans to change the rule that will make it easier for home-grown start-ups to list their shares on local bourses, helping domestic investors to bet on the country's booming online economy. One of the main items that could be scrapped is the need to detail the use of proceeds from the initial public offering of shares, they said.
 
The government has decided to divest its stake in BHEL next fiscal. Other state-run companies, which are on the block, include NMDC, NALCO and IOC, with 10% stake sale proposal each. This is a step towards raising of Rs41,000 crore stake sale target for 2015-16.
 
Coming back to Indian stock markets, Suzlon Energy (10.90%) was the top gainer in ‘A’ group on the BSE. PMC Fincorp (9.63%) was again the top loser in ‘A’ group on the BSE today.
 
Reliance Industries (1.39%) was the top gainer in the Sensex 30 pack. BNP Paribas upgraded it to “buy” from “hold” and made an upward revision in the target price.
NTPC (3.11%) was the top loser in Sensex 30 stock. According to media reports, government is in the process of selling 10% stake in NTPC. 
 
On Tuesday, US indices closed mostly in the red. The Federal Reserve may soon lay the groundwork for its first interest rate hike in nearly a decade, as it continues to weigh whether the US recovery can hold up against collapsing oil prices and a soaring dollar.
 
US housing finance companies Fannie Mae and Freddie Mac could require more bailouts from US taxpayers as risks are rising due to shrinking reserves, an internal watchdog for the firms' regulator said on Wednesday. These two firms had been bailed out in 2008 financial crisis.
 
Asian indices showed mixed performance. Shanghai Composite (2.13%) while NZSE 50 (0.99%) was the top loser.
 
European indices were showing mixed performance while US Futures were trading in the red.
 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)