Straight from the Specialists
Banking is the backbone for growth in large economies such as India. Banks provide short-term finance to trade, industry and agriculture while also ensuring excess money is channelized into productive assets via deposits and financial intermediation.
Banks have to work under the stipulated policies of the central bank with respect to deposit mobilisation and lending for which they need to maintain minimum cash balances and government securities.
Banks may either run a surplus (deposits higher than lending) or a deficit (lending higher than deposits). Cash-rich banks lend to cash-deficient banks for a limited period through overnight call money, commercial deposits, etc. The central bank also offers liquidity through:
- Liquidity Adjustment Facility (LAF) at the repo rate (currently 7.25 percent) up to a limit for up to seven days against excess Statutory Liquidity Ratio (SLR) as collateral.
(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)
Infosys stumped Indian markets again but for a change — positively. Recent management comments had built expectations of underperformance which led to cautious to negative views on the stock. Institutional investors were light on Infosys whereas the more adventurous speculators were short. And we were all caught on the wrong foot when the company declared a revenue growth as well as a net profit much better than consensus expectations.
A resolution for the U.S. “fiscal cliff” helped the markets cross the psychological Nifty benchmark of 6,000 to close the week up 1.82 percent at 6,016.
Though I expected a spirited rally, what we witnessed last week is a strong consolidation around 6,000 which could form a solid bottom for the next leg of the rally. This is also facilitating the entry of domestic retail investors which is visible in the mid-cap and small-cap volume and performance. The BSE small-cap index moved up 3.71 percent whereas the BSE mid-cap index gained 3.13 percent.
If calendar year 2012 was the year of scams in India which helped induce some much needed government reforms, the year 2013 is expected to be a year of hope and expectation for India and India Inc. There are expectations on better political governance, fall in inflation levels and hence interest rates, creation of an investment friendly business environment and lots more. It’s also the year with the last finance budget before the 2014 general elections.
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Markets struggled to hold beyond Nifty levels of 5900 and closed the week 0.47 percent down, breaking a three-week streak of gains. Uncertainty over the banking regulations bill seems to have overshadowed better-than-expected wholesale price index-based inflation data in November. Industrial production soared by 8.2 percent, surprising analysts and sending signals that green shoots of economic recovery are visible.