The benchmark stock indices have made a poor start to the week with a loss of close to 1% at open. Stocks had ended a 6-week winning streak last week.<\/p>\n
Gold prices continue to be in focus as investors remain worried about increasing economic uncertainties.<\/p>\n
Join us as we follow the top business news through the day.<\/p>\n
2:30 PM<\/p>\n
RBI likely to cut rates despite inflation risk<\/h2>\n
Reviving growth by boosting demand could take precedence over the inflation target.<\/p>\n
Reuters<\/em> reports: “India’s worsening economic outlook as coronavirus cases soar has raised the chance the central bank will cut interest rates at its policy review on Thursday, in spite of inflationary pressures.<\/p>\n Around two-thirds of economists in a Reuters poll expect the Reserve Bank of India (RBI) to cut the repo rate by another 25 basis points (bps) on Aug. 6 to a record low of 3.50%, and once more next quarter.<\/p>\n \u201cHigh inflation has added confusion to the Reserve Bank’s policy outlook, but given the state of aggregate demand, we forecast the RBI will continue easing,\u201d said Rahul Bajoria, economist at Barclays who expects a 25-bp cut.<\/p>\n Annual retail inflation rose in June to 6.09% from 5.84% in March, remaining above the RBI’s medium-term target range of 2%-6%.<\/p>\n The RBI’s recent policies have focused on financial stability and the need to support growth despite the price target.<\/p>\n The country was placed under one of the strictest lockdowns in the world in late March for over two months to halt the spread of the coronavirus. The government gradually eased restrictions in June although infections continue to rise.<\/p>\n The poll showed most analysts expect the economy to contract 20% in the June quarter versus the April forecast of a 5.2% fall and remain in negative terrain until the December quarter.<\/p>\n For the full year 2020\/21, the economy is likely to shrink 5.1%, which would be its weakest performance since 1979, a sharp contrast to the 1.5% expansion forecast in April.<\/p>\n Apart from rate cuts, Upasna Bharadwaj, economist at Kotak Mahindra Bank, expects liquidity and regulatory measures from the RBI to address demand shocks and financial market dislocations.<\/p>\n \u201cRBI may look to widen the policy corridor to 75 bps by easing reverse repo by a higher quantum,\u201d she said, adding that though they expect a 25-bp rate cut, it may not be effective in the current environment.<\/p>\n The RBI has already reduced the repo rate by a total of 115 basis points since February, on top of the 135 basis points in an easing cycle last year, from 6.50%, responding to slowing growth.<\/p>\n Some economists, however, feel it may be prudent for the RBI to pause in August before resuming its rate-cutting cycle once inflation has stabilised.<\/p>\n Weakness in growth versus above-target inflation, improving indicators and concerns over inflation expectations will put the RBI in a tough spot, said DBS economist Radhika Rao.<\/p>\n \u201cIt will be a close call, but we see slightly higher odds for a pause.\u201d”<\/p>\n 2:00 PM<\/p>\n The recovery rally in oil is facing stiff resistance as suppliers boost output.<\/p>\n Reuters<\/em> reports: “Oil prices fell on Monday on oversupply worries as OPEC and its allies are set to wind back output cuts in August and a rise in worldwide COVID-19 cases points to a slower pick-up in demand.<\/p>\n Brent crude futures slid 27 cents, or 0.6%, to $43.25 a barrel by 0642 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 34 cents, or 0.8%, at $39.93.<\/p>\n Brent posted a fourth month of gains in July and U.S. crude posted a third as both rose from depths hit in April, when much of the world was in lockdown due to the coronavirus pandemic.<\/p>\n \u201cInvestors are worried about oversupply as OPEC+ is due to start reducing production cuts this month and a recovery in oil prices from record lows is likely to encourage U.S. shale producers to ramp up output,\u201d said Hiroyuki Kikukawa, general manager of research at Nissan Securities.<\/p>\n \u201cAlso, fears over a resurgence in the coronavirus cases are weighing on oil markets,\u201d he said.<\/p>\n Oil output by the Organization of the Petroleum Exporting Countries rose by over 1 million barrels a day in July as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an OPEC-led deal.<\/p>\n Russia’s oil output in July was unchanged from June levels, the nation’s Energy Ministry said on Sunday. OPEC+, a grouping of OPEC and allies including Russia, is set to step up output in August, adding about 1.5 million bpd to global supply.<\/p>\n U.S. energy firms kept the number of oil and natural gas rigs unchanged at a record low as the rig count fell for a fifth straight month, although July marked the smallest monthly decline of the five.<\/p>\n Oil prices are set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoys demand, although a second COVID-19 wave could slow the pace of a recovery, a Reuters poll showed on Friday.<\/p>\n The Australian state of Victoria declared a \u201cstate of emergency\u201d on Sunday, while authorities in the Philippines said they would impose fresh restrictions in Manila this week, reflecting global worries about getting the pandemic under control.<\/p>\n \u201cAdding to matters is that the U.S. consumer market is entering the last few weeks of peak driving season and with mobility tracking data flatlining,\u201d Stephen Innes, chief global market strategist at AxiCorp, said in a report.<\/p>\n \u201cUnless there is a significant drop in the COVID-19 case count curve that is sufficient enough to reduce consumer fear … and shift mobility data higher, demand might not get much better from here on in,\u201d Innes said.”<\/p>\nOil falls on fears of glut as OPEC+ set to boost output<\/h2>\n