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Week in Review for 23 April 2010

Week in Review for 23 April 2010
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First Published: Fri, Apr 23 2010. 10 34 PM IST
Updated: Fri, Apr 23 2010. 10 34 PM IST
Rates are up, but most investors are cheering. On Tuesday the RBI hiked policy rates by 25 basis points, which was in line with or below market expectations. The repo, which is the rate at which the RBI lends to banks, was increased to 5.25%. And the reverse repo, which is the rate at which banks lend excess cash to the RBI, is now at 3.75%.
Also up is the cash reserve ratio. The CRR is the portion of deposits a bank needs to park with the RBI. It’s up 25 basis points to 6%. The spike in the CRR is expected to take some Rs12,500 crore in excess cash out of the system.
Dark clouds are gathering and that could be great news for farmers. The India Meteorological Department announced its monsoon forecast Friday. It’s predicting a ‘normal’ monsoon that’s 98% of the 50-year average. The monsoon between June and September typically accounts for nearly 80% of all rainfall in India.
The government predicted normal rainfall last year as well. But India saw its poorest monsoon in 37 years in 2009, setting off a drought and sending food prices skyrocketing.
This week has also seen a flurry of corporate results. On Friday India’s biggest company RIL announced its quarterly numbers. Net profit was up 30% to Rs4,710 crore, which was actually lower than most estimates. Revenues reached Rs57,570 crore, and increase of 121%. RIL’s numbers have been hit by rising costs and a decline in its other income. Another factor hurting its profitability is the fall in its refining margins, which stood at $7.50 a barrel for the quarter.
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First Published: Fri, Apr 23 2010. 10 34 PM IST