HSBC pegs Q2 growth at 6.3%, sees inflation holding rates
MUMBAI: British brokerage HSBC on Tuesday said GVA growth will come in at 6.3 per cent for the second quarter, and risks to inflation will prevent the Reserve Bank from tinkering its policy rates at the next review. Growth data for the July-september period is expected to be released on Thursday, while the Reserve Bank will be coming out with a bi-monthly review on December 6.
"While recovery is expected to be only modest, inflation risks are edging higher," economists at the brokerage said.
In a note, they said gross value added (GVA) growth will come at 6.3 per cent for the second quarter, which is higher than the three-year-low of 5.7 per cent clocked for the preceding three months, but much lower than the economy's potential.
It said agricultural growth will moderate on low production of key crops and a drag from animal husbandry to its longterm average, while industrial growth will go above 4 per cent as manufacturing is picking up pace.
On inflation, the note warned food inflation could be joining core and fuel in becoming a potential upside risk in the coming months.
After slumping in June, core inflation climbed back to over 4 per cent and is expected to remain sticky or accelerate further as well, on items like household goods and services, health, personal care, it said.
It pointed out that fuel inflation is also a risk, given the limited fiscal room to cut the high duties on fuels.
"No reason to tweak policy rates, till clear signs emerge. Given inflation risks are tilting on the upside, the RBI will keep the repo rate on hold at 6 per cent in the foreseeable future, giving primacy to the inflation target," it said.
It said an interest rate cute will be "unwarranted" given that RBI expects growth to pick up to 7 per cent level in the second half of the fiscal, while a hike in rates will be "detrimental" to the "fragile" recovery. NEW DELHI: Shares of Reliance Communications on Tuesday ended nearly 4 per cent lower amid reports that China Development Bank has filed an insolvency case against the telecom firm, which the company has denied.
Trimming most of its early losses, the stock ended the day at Rs 12.90, down 3.37 per cent on BSE. During the day, it slipped 8.61 per cent to Rs 12.20. At NSE, shares of the company went down 3.74 per cent to close at Rs 12.85.
In terms of equity volume, 67.51 lakh shares of the company were traded on BSE and over 7 crore shares changed hands at NSE during the day.
BSE had sought clarification from Reliance Communications after market hours yesterday with respect to news that China Development Bank has filed an insolvency case against it.
In a clarification to BSE, Reliance Communications spokesperson yesterday said: "The company has not been served any notice of the application filed by China Development Bank with NCLT, as reported in the media."
However, in the interest of all stakeholders, the spokesperson said: "The company is engaged through the JLF (joint lenders forum) with all its lenders for a successful resolution of the SDR process. China Development Bank has also been actively participating in the JLF." The company is therefore, surprised by the untimely and premature action of China Development Bank of filing an application at NCLT, the spokesperson added.
The company continues to remain engaged with all lenders including China Development Bank and is confident and committed to a full resolution with the support of all the lenders.