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Indian markets well placed to absorb Fed rate hike

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Shaktikanta Das

New Delhi/Washington, March 16: The Indian economy is strong enough to absorb the impact of the US Federal Reserve interest rate hike, the government said on Thursday.

“Indian markets well placed to absorb US Fed rate hike. Gradual approach in future increases augurs well for emerging markets,” India’s Economic Affairs Secretary Shaktikanta Das said in a tweet, a day after the Fed hiked lending rates for the third time since the 2008 global financial crisis, with the American job market strengthening and the control of inflation rising toward its target.

The Fed, on Wednesday, raised its key interest rate by 25 basis points (bps), making its third rate hike since the financial crisis and the second time in three months.

In December 2016, the Fed increased its benchmark rate by 25 bps in the first rate hike in 2016 and just the second in a decade. The first was in December 2015.

In view of realised and expected labour market conditions and inflation, the central bank decided to raise the target range for the federal funds rate by 25 basis points to 0.75-1.0 per cent,” the Fed’s policy-making committee said in a statement released after its two-day meeting in Washington.

The committee did not indicate any plans to accelerate the pace of monetary tightening. Further rate increases would only be “gradual”, the statement said.

Indian equity markets reacted positively and the key indices opened higher on Thursday. The Sensitive Index (Sensex) of the BSE, which had closed at 29,398.11 points on Wednesday, opened higher at 29,482.83 points.

Minutes into trading, it was quoting at 29,568.03 points, up by 169.12 points, or 0.53 per cent.

At the National Stock Exchange (NSE), the broader 51-scrip Nifty, which had closed at 9,084.80 points, was quoting at 9,138.85 points, up by 54.05 points or 0.59 per cent.

US Labour Department data on Friday showed that total non-farm payroll employment in the country increased by 235,000 in February. The unemployment rate was little changed at 4.7 per cent.

Earlier in March, US Federal Reserve chairperson Janet Yellen had signalled that an interest rate hike in March’s monetary policy will likely be appropriate, if the economy progresses in line with official expectations.

With the job market strengthening and inflation rising toward our target, the median assessment of FOMC participants as of last December (2016) was that a cumulative 3/4 percentage point increase in the target range for the federal funds rate would likely be appropriate over the course of this year,” Yellen said in a speech at the Executives’ Club of Chicago.

She also warned that waiting too long to raise interest rates could force the American central bank to act quickly in response to economic risks, which in turn could risk disrupting financial markets and pushing the economy into recession.

According to analysts, a Fed rate hike of 25 bps could set off capital outflows from emerging market economies like India with large external funding needs and macro-economic imbalances, thereby increasing their vulnerability.

While the impact of the rate increase on the US economy will be negligible, emerging market economies with large external funding needs and macro-economic imbalances could be vulnerable to capital outflows,” Moody’s Investors Service has said in a report.

“The most direct impact will be felt in those economies that have high external financing needs relative to their foreign exchange earnings and reserves,” the report said.

The American agency said the spillover effect of the rate hike may manifest itself in different ways.

For instance, in some cases a pronounced currency depreciation could lead to higher inflation, which, along with the threat of sustained capital outflows, could force central banks to raise interest rates,” it said.

The Fed’s tightening could have negative spillovers for those with large external funding needs, high leverage, macroeconomic imbalances, or uncertainties around politics and policies,” it added.

The Federal Reserve slashed rates to zero in 2008 in the wake the financial crisis and kept it at that level throughout the period of major economic slowdown that followed.

India is currently seen as being better equipped than other emerging markets to ride the impact of higher US interest rates because of its stronger economic growth and impressive foreign exchange reserves of more than $300 billion.

IANS

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Equity indices close higher, RIL top gainer

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SENSEX-

Mumbai, April 24: Healthy buying in oil and gas, banking and auto stocks, coupled with broadly positive global cues, lifted the key Indian equity indices on Tuesday.

Index heavyweights like Reliance Industries (RIL), Yes Bank, Adani Ports, Mahindra, Larsen and Toubro were the top gainers on the BSE.

However, heavy selling pressure in metals, IT and consumer durables stocks trimmed some gains of the benchmark indices, market observers said.

The wider Nifty50 of the National Stock Exchange (NSE) rose by 34.05 points or 0.32 per cent to provisionally close (at 3.30 p.m.) at 10,618.75 points.

The barometer 30-scrip Sensitive index (Sensex) of the BSE, which opened at 34,491.38 points, closed at 34,616.64 points — up 165.87 points or 0.48 per cent from its previous session’s close.

The Sensex touched a high of 34,706.71 points and a low of 34,465.49 points during the intra-day trade.

In contrast, the BSE market breadth remained bearish with 1,479 declines and 1,191 advances.

On Monday, the equity indices closed a volatile trade session on a flat-to-positive note as healthy quarterly results drove investors’ sentiments.

The Nifty50 closed higher by 20.65 points or 0.20 per cent at 10,584.70 points, while the Sensex closed at 34,450.77 points — up 35.19 points or 0.10 per cent.

IANS

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Xiaomi, Jio top India market

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xiaomi jio

New Delhi, April 24: Xiaomi continued to lead the Indian smartphone market with 31.1 percent market share while Reliance Jio topped the feature phone market with a massive 35.8 percent share in the first quarter of 2018, a new report has said.

Xiaomi was the leader with 25 per cent market share in Q4 of 2017.

According to Counterpoint’s “Market Monitor” service, Samsung with 26.2 per cent share was second, followed by Vivo at 5.8 per cent share in the smartphone segment.

Driven by the feature phone segment which doubled owing to strong shipments of Reliance JioPhone, India’s overall mobile phone shipments grew 48 per cent (YoY) in Q1 2018.

Honor (Huawei) entered top five smartphone brands for the first time. Honor (146 per cent), Xiaomi (134 per cent) and OnePlus (112 per cent) were the fastest growing smartphone brands.

“Q1 2018 started off with some brands sitting on inventory post the festive season in Q4 2017, which continued throughout the quarter as industry moves to a Full View display portfolio,” Karn Chauhan, Research Analyst, said in a statement.

Furthermore, the quarter was also marked with less than normal smartphone launches as very few brands refreshed their portfolio, except for Xiaomi and Samsung which benefitted from the new launches.

“However, we expect the demand to start picking up from early Q2 2018 onwards, driven by faster replacement rate of existing 2G and 3G smartphone users upgrading to 4G mobile phones,” Chauhan added.

This is the first time that the top five smartphone brands accounted for more than 70 per cent market share in a single quarter.

“Xiaomi and Samsung alone captured 58 per cent of the total smartphone market. Xiaomi’s Redmi Note 5 and 5 Pro were the most popular models for the Chinese brand, whereas Samsung Galaxy J7 NXT and J2 (2017) drove volumes for the Korean vendor,” said Anshika Jain, Research Analyst.

The performance of Chinese brands remained strong, accounting for 57 per cent of the total smartphone market in Q1 2018, up from 53 per cent during Q1 2017.

“The demand for JioPhone continued through Q1 2018 as Reliance Jio’s feature phone market share raced from 0 per cent last year to 36 per cent in Q1 2018. This demand was catalysed by the introduction of a cheaper data plan,” said Tarun Pathak, Associate Director.

China based Transsion Group (the holding group of Tecno, Itel and Infinix) has become the fifth largest player with four per cent market share in Q1 2018 (combined for all three brands).

The race for the fifth position is quite close between Lava, Micromax, Honor, Nokia (HMD) and Lenovo (+Moto) brands.

Itel is the third largest player in the feature phone segment with 17 per cent growth (YoY).

IANS

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Key equity indices provisionally end in green

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Mumbai, April 23: The key Indian equity indices provisionally closed in the green on Monday on the back of healthy buying in consumer durables, healthcare and IT stocks.

However, selling pressure on metal and fast moving consumer goods (FMCG) stocks trimmed gains in the market.

At 3.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) provisionally closed higher by 20.65 points or 0.20 per cent at 10,584.70 points.

The barometer 30-scrip Sensitive index (Sensex) of the BSE, which opened at 34,493.69 points, closed at 34,450.77 points (3.30 p.m.) — up 35.19 points or 0.10 per cent — from its previous session’s close.

The Sensex touched a high of 34,663.95 points and a low of 34,259.27 during the intra-day trade.

The BSE market breadth was bullish with 1,399 advances and 1,284 declines.

On Monday, the major gainers on the BSE were IndusInd Bank, Mahindra and Mahindra, Sun Pharma, Asian Paints and Yes Bank while HDFC Bank, Tata Motors (DVR), Coal India, Hero MotoCorp and ICICI Bank were among the major losers.

On NSE, the top gainers were IndusInd Bank, Mahindra and Mahindra and BPCL. The major losers were Hindalco Industries, Indiabulls Housing Finance and UPL.

On Friday, negative global cues such as high crude oil prices, along with a weak rupee and heavy selling pressure in banking stocks subdued the key Indian equity markets.

The Nifty50 closed at 10,564.05 points on Friday, down 1.25 points or 0.01 per cent from its previous close and the Sensex closed at 34,415.58 points, down 11.71 points or 0.03 per cent.

IANS

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