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The Mint Report for 25 January 2011

The Mint Report for 25 January 2011
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First Published: Tue, Jan 25 2011. 10 39 PM IST
Updated: Tue, Jan 25 2011. 10 39 PM IST
We start with the RBI, which increased its two key policy rates by 25 basis points each on Tuesday. The repo, which is the rate at which it lends to banks, is now at 6.5%. And the reverse repo, which is the rate at which it borrows from banks, has been increased to 5.5%. The RBI said the hikes help prevent rising food and fuel prices from spilling over into overall inflation. But it added that the increases were moderate enough not to affect growth.
Tuesday’s hikes were in line with most analyst expectations. This is the seventh time the RBI has increased rates since March.
Meanwhile, bankers have reacted to the hikes by saying their interest rates were under pressure. SBI chairman O.P. Bhatt said the relatively small hike might not lead to higher interest rates immediately, but had created an upward bias. And Chanda Kochhar, the CEO of ICICI Bank, said that while cost of funds would go up, no overnight hikes in rates were likely.
And switching to corporate, HUL’s profits have fallen in the third quarter. They declined to Rs638 crore from Rs649 crore in the same period last year. That’s despite a 12% growth in revenues to Rs5,128 crore. HUL’s profits fell in spite of a 13% increase in its domestic consumer business.
The company has seen its cost of goods rise during the quarter because of higher material prices. Stocks of HUL plunged 5.45% on the BSE to finish at 281.65.
And finally, the RBI’s rate hikes may have been expected, but they spooked Indian markets on Tuesday. The Sensex tumbled 182 points to 18,969. And the Nifty lost 56 to close at 5,687.
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First Published: Tue, Jan 25 2011. 10 39 PM IST
More Topics: The Mint Report | RBI | SBI | ICICI | HUL |