New Delhi: The RBI signaled the beginning of the end of its easy monetary policy on Tuesday, even as it maintained major rates at the same levels. The repo rate will hold at 4.75% while the reverse repo rate is still at 3.25%. The cash reserve ratio stands at 5%. But the RBI also increased banks’ mandatory investment in government bonds back to 25% from earlier rate of 24%. The RBI also defended keeping rates constant saying India’s economic recovery was still fragile and that premature tightening would hurt growth.
The government has removed the import duty on rice until September of 2010. Its move is part of its efforts to increase the domestic supply of rice amidst fears of a shortage after both droughts and floods hit India’s farms sector.
Wipro beat both street expectations and its own guidance when it posted its quarterly results on Tuesday. Net profits went up 19% to Rs1,162 crore compared to a year earlier. Total income also went up, though by just under 6% to Rs7,057 crore. Wipro makes everything from soaps to software, but the company relies on its IT operations for more than two-thirds of its business. In recent times Wipro has added 37 new clients including Nokia Siemens and Delhi International Airport Ltd.
Falling prices have taken their toll on Tata Steel. The company’s net profits fell nearly 49.5% to Rs903 crore rupees in the second quarter. Net sales also fell, going down to Rs5,630 crore from the earlier Rs6,730 crore. Steel production plummeted worldwide this year after the economic downturn reduced demand from sectors like construction and automobiles. Tata Steel’s Indian operations account for only a quarter of its total capacity.
Jet Airways continues its descent. The airline’s second quarter losses widened nearly 6% to Rs407 crore. Its total income also fell 27% from Rs3,258 crore to Rs2,381 crore. Jet Airways says its losses were mainly because of overcapacity in the market and increased competition.
Anil Ambani’s Reliance Power posted gains on Tuesday. Its net profits shot up by 422% to Rs195 crore in the second quarter. Reliance Power currently has no operational income because all its plants are still under construction. Instead most of the company’s profits came from the other income category, which refers to operations outside of a company’s core activities.
Hyundai has taken Mahindra Renault to court over its plans to launch a compact car called the Sandero. Hyundai claims the new car’s name is similar to that of its own successful car Santro. Mahindra Renault is a joint venture between Mamhindra and Mahindra and Renault.
Banks led losses in the markets on Tuesday after concerns about the new monetary policy. The Sensex shot downwards 387 points to close at 16,353 and the Nifty fell 124 points to end trade at 4,847.