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Research

Lenders/Bankers should take cue from SEBI’s guidelines on disclosure and provide timely information to CRAs says Brickwork Ratings

The market regulator, Securities and Exchange Board of India (SEBI), in its board meeting held on Aug 21, approved a slew of amendments in a bid to rationalize the existing regulatory framework for Foreign Portfolio Investors (FPIs) and boost efficient rating mechanism in India.

Stagnant manufacturing activity needs further monetary stimulus

Lower fuel prices leads to marginal easing of CPI Inflation to 3.15% in July. The Consumer Price Index (CPI) inflation rate softened marginally in July compared to June 2019 largely driven by fall in fuel prices. As per the August release of Ministry of Statistics and Programme Implementation (MOSPI), the CPI inflation rate eased by 3 basis points over the previous month to 3.15%(provisional estimates, measured by y-o-y change) in July 2019. Despite gradually rising for last 5 months, the inflation remained within the mid-point of MPC range enabling rate cuts to 110 basis points in 2019 so far.

Economy’s slow start needs to accelerate

In the July 2019 edition of Global Economic Prospects, World Bank cited that India’s growth remains solid, supported by improved confidence, slowing inflation and still robust investment. The report suggests the economy to grow a slower pace than in 2018, although investment growth is expected to remain robust as benefits of recent policy reforms further materialize. Further, the report also projects the growth to accelerate to 7.5% in FY 2019-20, on the back of support from monetary and fiscal policies.

BWR sees a southern trend in interest rates; Looks out for quicker transmission of rates

Brickwork Ratings, 07 August 2019, Mumbai: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) reduced the key policy repo rate by 35 bps to 5.40%; which is a fourth consecutive cut in the policy rate and the lowest repo rate since April 2010. The MPC decided to keep the stance unchanged as accommodative, in line with BWR expectations.

BWR expects 25 basis points rate cut in August 2019 MPC

The Economic Survey 2018-19 and Union Budget 2019-20 indicated that the government aims to push the economy to USD 5 trillion by 2024-25. This would require the economy to grow at about 9% at the constant exchange rate. BWR feels that a rate cut would help to revive investment and provide consumption push to the economy and boost the critical factors contributing to the growth. Since the last June 2019 Monetary Policy Committee (MPC) meeting, indicators show economic activity has been slowing characterized by muted performances with respect to the high frequency indicators in critical sectors such...

IIP growth trends and marginal increase in CPI Inflation provide headroom for MPC to consider Monetary easing

In the July release of Ministry of Statistics and Programme Implementation (MOSPI), the Consumer Prices Index (CPI) witnessed increase for the fifth month in a row. CPI inflation rose to 3.18% (provisional estimates, measured by y-o-y change) compared to 3.05% reported in May 2019. Despite touching 3.18% in June, CPI inflation remained within the mid-point of the flexible inflation target of 4% mandated to the Monetary Policy Committee (MPC) of the Reserve Bank India (RBI).

Budget Proposals: A Booster Shot for the Economy

India managed to maintain macroeconomic stability by containing inflation within 4% and current account deficit (CAD) to GDP ratio at 2.1% during 2018-19. However, due to slowdown in the domestic economy on account of lower farm output witnessed in the fourth quarter (Q4) of 2018-19, the full year GDP growth rate was revised downwards to 6.8% compared to 7.2% reported in the previous year. Along with agriculture, manufacturing sector also witnessed deceleration in growth as evident from weak IIP numbers....

UNION BUDGET 2019-20

Presenting the first financial budget of the current Government, the Union Budget 2019-20, the Finance Minister has clearly articulated a combination of measures for the long-term and immediate year with a clear vision for a $5 trillion economy by 2025. In formulating the fiscal policies, the FM strives to be innovative, responding to community aspirations promptly and effectively, and providing a head start to foster long-term development.

Balancing Fiscal Deficit Target and Growth – Key Challenge for the Finance Minister

While a full Budget would be presented on July 5th 2019 expectedly on the lines of the interim budget presented in February 2019, the reformist contours of policy making and the conundrum of fiscal prudence would be weighed-in. The challenges faced by the domestic economy particularly slowing trade, rising protectionism...

CPI Inflation has crossed 3% in May 2019 after a gap of 7 months

As per the latest data released by Ministry of Statistics and Programme Implementation (MOSPI), Consumer Prices Index (CPI) Inflation witnessed sequential rise for the fourth month in May 2019 to 3.05% (provisional estimates, measured by y-o-y change) from 2.99% (revised from 2.92% reported earlier) in April 2019.

Expected Revival in GDP Growth with Political Stability and Monetary Stimulus

GDP growth slowed down to 5.8% in Q4 2018-19, thus dragging down the estimates of FY 2018-19 growth at 6.8%. However, the domestic economy expected to improve in 2019-20 on the back of monetary easing, benefiting from benign inflation coupled with relatively lower oil prices than expected. Political continuity ensured by the outcome of the general elections also helped to improved growth prospects in 2019-20...

RBI's revised directive provides much needed flexibility for lenders while ensuring credit discipline

The Reserve Bank of India today released revised norms for resolution of stressed assets in the wake of the judgment of the Hon’ble Supreme Court of India.

BWR expects a rate cut in August Policy due to the recent slump in growth numbers and benign inflation

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) reduced the key policy repo rate by 25 bps to 5.75%; which is a third consecutive cut in the policy rate and changed the stance to accommodative from neutral. The rate cut and stance both are in line with BWR expectations. All six members of the MPC, including the Governor of RBI, unanimously decided to reduce the policy repo rate and change the policy stance.

BWR expects Monetary Policy Committee to cut repo rate by 25 basis points

BWR expects the Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) to cut key policy reporate by 25 basis points in the ensuing policy review of June 6, 2019. The MPC has reduced repo rates - 25 basis points each - continuously in its earlier two MPC reviews.

Inflation and IIP report

CPI Inflation increased to 2.92% in April compared to 2.86% in March. The overall inflation rate is expected to be benign in the next 12-18 months and provides room for the rate cut, although the core inflation has been higher than 5% in recent months. There are also risks arising from the US sanctions on Iran impacting the oil prices. On industrial output, while the growth has decelerated, the capacity utilization is at the highest level. Therefore, increase in output growth will critically depend on new investments.

FX Swap to Help Manage Liquidity Efficiently and Mitigate Rise in Interest Rates; Real Impact to be known by 2022

Brickwork Ratings, Mumbai, 15 May 2019: The Reserve Bank of India (RBI) introduced a new liquidity management tool in the form of dollar-rupee swap in March 2019 to meet the durable liquidity needs of the system. This is an addition to its many liquidity management tools like Liquidity Adjustment Facility (LAF) and Open Market Operations (OMOs).

CPI Inflation edges up to 2.86% in March 2019....

Inflation, measured by y-o-y change in the Consumer Prices Index (CPI), rose to 2.86% in March 2019, the second consecutive rise in 2019 after touching a 19-month low of 1.97% in January 2019. An upturn in food inflation coupled with marginal increase in inflation in the fuel group led 29 bps increase in the CPI inflation in March. With this, the average inflation for 2018-19 stood at 3.4% as compared to 3.6% during 2017-18.

Brickwork Ratings expects further rate cuts in FY20 in RBI Monetary Policy; Slow growth rate and benign inflation will be the basis of the expectation

Brickwork Ratings, 04 April 2019, Mumbai: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) reduced the key policy repo rate by 25 bps to 6%; which is a second consecutive cut in policy rate. The rate cut and stance both are in line with BWR expectations.

BWR expects Monetary Policy Committee to cut rates by 25 bps

Brickwork Ratings, 04 April 2019, Bengaluru: Brickwork Ratings expects Reserve Bank of India (RBI) led Monetary Policy Committee may again reduce the key policy rate- repo rate by a quarter point (25bps) at first Bi-Monthly Monetary Policy Statement of the financial year 2019-20 after one slice in February policy due to growth pressure and benign inflation state.

Funding Challenges to Continue for India’s Shadow Banks in H1FY20

Liquidity Crunch fueled by muted demand from capital market and low appetite from banks.
Brickwork Ratings, Mumbai, 18 March 2019: Brickwork Ratings sees prolonged liabilities mismatch for India’s shadow banks – Non Banking Financial Companies (NBFCs).

Economy on the Revival Path: Need for a Calibrated View

The third quarter estimate of GDP for the year and the second advance estimate of National Income for 2017-18 released on February 28 shows that the economy, after the two major disruptions is in the recovery mode. There has been a steady acceleration in the growth of GDP from 5.7 per cent in the first quarter to 6.5 per cent in the second and further to 7.2 per cent in the third quarter.

Popular budget amidst attempt to fuel growth and infrastructure

Mumbai, 01 February 2018: Contrary to the expected populist budget, this year budget provides impetus to growth and is a good balancing act of driving growth agenda and keeping some popular measures for the masses. A strong emphasis has been given for uplift of Rural Sector, Healthcare, Education & Infrastructure to accelerate economic growth. The budget is credit positive for business environment especially for the MSME sector, one of the largest job generators in the country.