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Reliance Industries makes rare buy of Russian naphtha, ups fuel oil imports

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India's Reliance Industries, operator of the world's largest refining complex, is snapping up Russian refined fuels, including rare purchases of naphtha, after some Western buyers stopped Russian imports, trade flows data from Refinitiv showed.


Western sanctions against Russia over its invasion of Ukraine have led to an emergence of rare trade routes for Russian crude and refined products that were mainly sold to European countries.


India imported about 410,000 tonnes of naphtha, used for making petrochemicals, in Sept-Oct, the Refinitiv data showed.


Of this figure, Reliance received about 150,000 tonnes from the Russian ports of Ust-Luga, Tuapse and Novorossiysk during the two months, the data showed.


The private refiner did not buy Russian naphtha in 2020 and 2021. Its annual imports of Russian naphtha were restricted to just one parcel in four years to 2019, the data showed.


The data showed a panamax carrier Okyroe sailing towards India laden with about 59,000 tonnes of Russian naphtha.


"With European countries shutting down Russia, they need to find outlets for their naphtha," a trader based in India said, referring to Russian firms.


Russian naphtha is being sold at lower premiums to countries like India, two Asian naphtha traders said.


FUEL OIL IMPORTS SURGE


Reliance, its two plants together capable of processing 1.4 million barrels of oil a day, has emerged as a key buyer of Russian oil since Moscow's February military action in Ukraine.


It also buys straight run fuel oil from countries, including Iraq and Russia, to process at cokers in the two refineries in the western Indian state of Gujarat to boost refining margins.


Reliance's fuel oil imports from Russia have surged to a record 3 million tonnes since the beginning of this fiscal year in April, versus about 1.6 million for all of 2021/22, Refinitiv data shows.


Reliance is expected to receive about 409,000 tonnes of fuel oil in December, the data showed.


Reliance did not respond to Reuters emails seeking comments.


Mission Prarambh | Vikram-S takes off: All you need to know about India's first private sector rocket

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The country's first privately developed rocket Vikram-S blasted off on its maiden flight from the Indian Space Research Organisation’s Sriharikota spaceport, about 115 kms from Chennai, at 11.30 am on November 18.

The Mission Prarambh (the beginning) is a major milestone in India's space journey, making Skyroot Aerospace the first private company to launch its rocket two years after the sector was opened to private players.

Named after Vikram Sarabhai, the founder of India’s space programme, Vikram-S carries three satellites, including one by SpaceKidz India called FunSat, parts of which were developed by school students.

Its previous November 12 launch date was called off due to bad weather.

The Vikram rockets will be able to carry between 290 kg and 560 kg payloads into sun-synchronous polar orbits. The rocket is one of the world's first few all-composite rockets that has 3-D printed solid thrusters for spin stability of the launch vehicle.

This launch will aid in the validation of many technologies for Skyroot Aerospace's other launch vehicles in the Vikram series, such as Vikram I/II/III, and will also play an important role in determining when Vikram I will launch next year.

(This is a developing story. Keep following the space for updates.)

Crunchy debut for Bikaji Foods as shares open 7.5% above IPO price

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Bikaji Foods International: Bikaji Foods International to make a debut on November 16. The country's third largest ethnic snacks company will make its grand debut on the bourses on November 16. The issue price has been fixed at Rs 300 per share.

Snacks company Bikaji Foods made a firm start on the bourses on November 16 as the stock traded 7.6 percent above the IPO price of Rs 300, listing at Rs 321.15 on the BSE and at Rs 322.80 on the National Stock Exchange.

The Rs 881-crore initial public offering (IPO) was subscribed 26.67 times during the November 3-7 period backed by qualified institutional buyers. QIBs subscribed more than 80 times their quota of shares and high net-worth individuals over seven times. The portions set aside for retail investors and employees were subscribed 4.77 and 4.38 times.

The ethnic snacks company had fixed the price band for the issue at Rs 285-300 a share.

Analysts like that the company leads in its core states (Rajasthan, Assam, and Bihar) and boasts an international footprint, a healthy top line and a strong management team

Speaking to CNBC-TV18, Rishabh Jain, CFO, Bikaji Foods said, “We are looking at double-digit margin in the second half of this year. We don’t need major capex for next 3-4 years. Core markets are 72 percent of total business and we will be focussing on growing that. Uttar Pradesh is the biggest market for us.”


Revenue from operations grew 22.90 percent to Rs 1,610.96 crore for FY22 from a year ago. However, net profit declined to Rs 76.03 crore in FY22 as against Rs 90 crore in FY21 on the back of high input costs. “Sustainability of margins going forward amidst stiff competition raises concerns,” said Manoj Dalmia, founder and director, Proficient Equities.

Bikaji Foods competes with Haldiram’s, the market leader in traditional savouries and snacks in India. Owners of Haldiram's are related of the promoters of Bikaji Foods. Bikanerwala Foods, Balaji Wafers, Prataap Snacks, DFM Foods, Pepsi and ITC are the other players in the segment.


COP27 | Five issues that could see developed and developing nations locking horns over

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Many developed countries, such as the United States, have opposed looking at finance for loss and damage as a ‘compensation’ for damages, and blocked negotiations on providing funds for itCOP27 | Five issues that could see developed and developing nations locking  horns over


Climate Change negotiations, formally called the 27th edition of Conference of Parties (COP27), begin on November 6 at Sharm El-Sheikh in Egypt.

To understand what issues will be the most difficult to resolve at COP27, we reached out to several Climate Change negotiators from developing countries. Here are five of the issues:

Climate Finance

In 2010, rich countries committed to providing $100 billion per year to poor countries by 2020. During COP26 in Glasgow in 2021, the rich countries admitted to have failed to mobilise these funds. The poor countries will ramp up pressure on the rich to deliver.

Then, there will be debates to pace up the work on deciding what should be the size of total funds to be mobilised. To begin with, decide a definition of what constitutes ‘climate finance’. The Like Minded Developing Countries group, which includes both India and China, has stressed on defining climate finance to ensure that rich countries are held accountable for their commitments. The absence of a definition has allowed rich countries to greenwash their finances, and also pass off loans as climate-related aid.

Loss And Damage

Irreversible damages caused due to Climate Change constitutes what is universally accepted as loss and damage . This includes extreme weather events, sea level rise, loss of biodiversity, and increase in temperature. Developing countries are more vulnerable to these events. But who will pay for the damages? To whom, and how? This year, as countries grapple with these questions, the stress will be on arranging funds that pays for these damages. Many developed countries, such as the United States, have opposed looking at this as a ‘compensation’ for damages, and blocked negotiations on providing funds for it.

Many developing countries are keen to see the establishment of a mechanism this year at Egypt to deliver funds to countries that suffer inevitable economic losses from Climate Change.

Article 2.1(c) the Paris Agreement

Article 2.1(c) of the Paris Agreement (PA) says that climate finance should be tied to low emissions-based development. This means that climate finance would be conditional on how funds are used; whether they’re being used for development that involves burning ‘dirty’ fossil fuels, or not.

Poor countries contest that this makes Article 2.1(c) ambiguous — as it would depend on how ‘low emissions-based development’ is defined. Say, for India, will funds be available for clean coal technologies or will that technology also get termed as dirty? This ambiguity also leads to inequalities in the distribution of funds.

Rich country groups, like the European Union, want a discussion on 2.1(c) as they feel it has not received due attention, and prevents everyone from building a clear understanding of how climate finance should be channelled.

Several large developing countries fear it’s a way of dictating their future economic trajectories, and even forcing them to adopt costly technologies that the rich nations want to sell without meeting their climate obligations to provide funds.

Global Goal On Adaptation

Adaptation means the ability of a country to respond to or deal with the impact of Climate Change. In 2015, under the PA, all nations decided to have a Global Goal on Adaptation (GGA) to increase the capacities of countries to adapt to Climate Change. The goal is still being worked out. The talks will see some trenchant arguments over:


  • What criteria would be used to understand which country is more vulnerable?

  • How will this goal be implemented?

  • Where will the money come from?

Mitigation Work Program

At COP26, countries decided to start a new channel of negotiations called the Mitigation Work Program (MWP). Rich nations were keen upon it. Mitigation here implies reducing emissions.

Developing countries, however, argue that this channel of negotiations — the MWP — replicates the work that will be done under another one, called the Global Stocktake. The Global Stocktake is a formal and more holistic exercise to assess global progress on all commitments by nations — which includes finance, technology, mitigation and adaptation — they have made under the PA.

Developing countries worry that the MWP is being engineered to push them to constantly revise their climate targets without enhancing the supply of technology and finance for them. This will have an adverse impact on poor countries who do not have the money to invest in building expensive technologies.

COP27 | Debt-for-climate swaps in times of economic crisis

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Developed economies could write off a developing economy’s debts, unburdening them of repayments and interest, allowing them to redirect the money towards supporting their own loss, and damage costsCOP27 | Debt-for-climate swaps in times of economic crisis

With just a few days to go until the opening of COP27 of the UNFCCC, and with every day marked by multiple climate disasters in some part of the world or other, developing and vulnerable countries are set to put the spot light on their demand to the rich world to deliver on the promised and new climate finance to help them mitigate, adapt, and survive.

In the lead is the V20 group of finance ministers, who have announced their intent to stop payment on a combined $685 billion in debt until the International Monetary Fund (IMF) and the World Bank address Climate Change the way their nations see fit. Their goal is to create a plan to swap some of their debt for climate adaptation and conservation projects.

Formed in 2015, the V20 group of finance ministers is a dedicated co-operation initiative of 58 economies systematically vulnerable to Climate Change. It is currently chaired by Ken Ofori-Atta, Finance Minister of the Republic of Ghana.

The UN Conference on Trade and Development research shows that regions facing higher vulnerability to Climate Change are more likely to suffer from severe indebtedness. High debt payments mean countries have fewer resources for mitigating and adapting to Climate Change. Yet Climate Change is increasing their vulnerability, and that can raise their sovereign risk, increasing the cost of borrowing. Declining productive capacity and tax base can lead to higher debt risks. It’s a vicious cycle.

With the economic situation worsening in all developing economies countries, international organisations are talking about “debt-for-climate swaps” to help tackle both problems at the same time. UN Deputy Secretary-General Amina Mohammed mentioned debt-for-climate swaps ahead of COP27 as one option for refinancing countries’ “crippling” debt. Developed economies could write off a developing economy’s debts, unburdening them of repayments and interest, allowing them to redirect the money towards supporting their own loss, and damage costs.

A report by the European Network on Debt and Development (Eurodad) said 37 island and coastal countries that are home to some 65 million people, received just $1.5 billion in climate finance between 2016 and 2020. Over the same period, 22 of the nations paid more than $26.6 billion to their external creditors. Public debt levels in the island states had risen from an average of near 66 percent of gross domestic product in 2019 to nearly 83 percent in 2020, and were set to remain above 70 percent until 2025.

The average debt for low- and middle-income countries, excluding China, reached 42 percent of their gross national income in 2020, up from 26 percent in 2011. For countries in Latin America, and the Caribbean, the annual payments just to service that debt averaged 30 percent of their total exports.

One thing is clear, without substantial debt relief, debtor countries are forced to accelerate natural resource exploitation to pay the debt, side-lining these environmental ambitions, and hindering future economic security. It is, therefore, imperative to align debt restructuring with climate and development goals.

Debt-for-climate swaps allow countries to reduce their debt obligations in exchange for a commitment to finance domestic climate projects with the freed-up financial resources.

They have been used since the late 1980s to preserve the environment and address the liquidity crisis in developing countries, including Bolivia, Costa Rica, and Belize. Belize, for example, was able to lower its debt in exchange for committing to designate 30 percent of its marine areas as protected areas, and to spend $4 million a year for the next two decades on marine conservation under a complex debt-for-nature swap. While debt-for-nature swaps have been used mostly for conservation, the same concept could be expanded to Climate Change mitigation and adaptation activities.

A country’s debt rests with many creditors, ranging from multilateral funds to other countries. Each would have to be engaged and negotiated with to excuse the outstanding debt making difficult calls on which country receives debt relief first, and on what basis.

Some finance experts have suggested that debt-for-climate swaps could be structured in a way that could also encourage private-sector bond holders to exchange the national debt they hold for carbon offsets.

Debt cancellation mechanisms may bring relief to developing nations that are struggling with the impacts of Climate Change. However, rushing into such an ambitious policy could be disastrous without a rigorous feasibility study, and careful planning. Any agreement to cancel debt would likely require the excusing parties to be assured that the money will reach the most vulnerable communities on the ground and not be swallowed up by corruption or internal bureaucracies.

Services sector picks up pace in October as PMI rises to 55.1

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India's services PMI for October has come in above the key level of 50 for the 15th month in a row


India's services sector picked up pace in October as the Purchasing Managers' Index (PMI) for last month edged up from September's six-month low.

Data released on November 3 by S&P Global showed the services PMI rose to 55.1 in October from 54.3 in September.

A reading above 50 indicates expansion in activity while a sub-50 print signals contraction.

The October print is the 15th month in a row that the services PMI has come in above the key level of 50.

"Favourable demand for services continued to underpin increases in new business and output at the start of the third fiscal quarter. Moreover, rates of expansion quickened from September's six-month lows. Buoyed by the ongoing recovery in new work, service providers again took on extra staff, with an improvement in business confidence also supporting hiring activity," S&P Global noted.

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Share Market Closing Note

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Topic :- Share Market Closing Note

Benchmark indices closed higher for the fourth consecutive session on November 1 with Nifty above 18,100.All You Need To Know About Stock Market Timings & Trading Sessions In India

At Close, the Sensex was up 374.76 points or 0.62% at 61,121.35, and the Nifty was up 133.20 points or 0.74% at 18,145.40. About 1765 shares have advanced, 1579 shares declined, and 129 shares are unchanged.

Adani Enterprises, Divis Labs, NTPC, Power Grid Corp and Grasim Industries were among the top Nifty gainers, while losers included Axis Bank, UPL, Eicher Motors, Reliance Industries and Maruti Suzuki.

Among sectors, Power, Metal, Pharma and Information Technology indices up 2 percent each, while Realty index up 1 percent.

The BSE midcap index rose 1 percent and smallcap index up 0.26 percent.

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Topic :- Time:3.10 PM

Upcoming FED meeting. Avoid holding overnight positions. Nifty spot close above 18160 level will result in some upmove and close below above mentioned level may result in some fall. 

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Topic :- Time:2.30 PM

GOLD Trading View:

GOLD is trading at 50519. If it manages to trade and sustain above 50540 level then expect some further upmove in it and if it breaks and trade below 50480 level then some decline can follow in it.

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Topic :- Time:1.15 PM

Just In:

Credit Suisse is not for sale, says chairman Axel Lehmann.

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Topic :- Time:1.00 PM

Nifty is falling from its higher levels. Nifty spot if breaks and trade below 18080 level then expect some further decline in the market and if it manages to trade and sustain above 18100 level then some upmove can follow in the Nifty.

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Topic :- Time:12.55 PM

Just In:

Price hikes helped Castrol India counter impact of higher input costs in September quarter

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Topic :- Time:12.45 PM

Nykaa reports Q2 earnings.

Net profit down 8.9% at Rs 4.1 cr Vs Rs 4.5 cr (QoQ)    

Revenue up 7.2% at Rs 1,231 cr Vs Rs 1,148.4 cr (QoQ)    

EBITDA up 33% at Rs 61.2 cr Vs Rs 46 cr (QoQ)

Margin at 5% Vs 4% (QoQ)

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Topic :- Time:12.30 PM

COPPER Trading View:

COPPER is trading at 658.30.If it breaks and trade below 657.80 level then expect some decline in it and if it manages to trade and sustain above 658.80 level then some upmove can further follow in it.

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Topic :- Time:12.10 PM

Just In:

1. EaseMyTrip clocks record sales as pent-up demand boosts travel agency

2. ASHOK LEYLAND OCT SALES ; TOTAL SALES UP 33 % At 14683 units (YOY)

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Topic :- Time:12.00 PM

Nifty is trading on a positive note. Nifty spot if manages to trade and sustain above 18160 level then expect some upmove in it and if it breaks and trade below 18120 level then some decline can follow in the market.

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Topic :- Time:11.30 AM

News Wrap Up:

1. Sensex at days high, up 500pts; Nifty50 above 18,150

2. Indias Manufacturing PMI rises to 55.3 in October, hiring at 33-mth high

3. RBI starts pilot of its digital currency, allows 9 banks to use it

4. Trade data from China, India shows gaping hole of $12 billion

5. Indias gold demand declines as inflation depresses rural demand

6. Bain Capital likely to sell stake in Axis Bank through block deal

7. Axis Bank slips 2% after 1.2% equity changes hands on BSE via block deal

8. Wheat price climbs nearly 6% after Russia withdraws from Black Sea pact

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Credit Suisse investors’ choice: a big loss or a bigger loss

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Credit Suisse’s $4 billion fundraising was always going to be painful for shareholders, but with a deep discount on the new stock, their choice is only about how much of their ownership they want to lose.Credit Suisse Investors' Choice: a Big Loss or a Bigger Loss - Bloomberg

The capital-raising plan was unveiled last week alongside a high-risk strategic overhaul, which still only promised a weak target for a 6 percent return on tangible equity in three years’ time, if things go according to plan. That is far below the 10 percent cost of capital assumed for big banks. It means Credit Suisse expects to be destroying value when its restructuring is done.

But the details of the share sale, which the bank released on October 31, leave investors with no real choice at all. The fund raising kicks off with new shares for a group of strategic investors led by state-controlled Saudi National Bank, who together will put in about $1.8 billion for a 14.8 percent stake.

That’s to be followed by a $2.2 billion rights issue. That stock will be priced at just 2.52 Swiss francs ($2.51) per share, which is a 32 percent discount to the theoretical share price after all the new equity has been sold and based on the average share price over the final two days of last week. Having already seen new investors take a large stake, the rights issue will further dilute the claims of each share over Credit Suisse’s profit or book value by 22 percent.

Together, all the new shares lead to bottom-line dilution of earnings per share of almost 34 percent. That sounds horrible until you look at the dilution if shareholders don’t approve the strategic stake sale, which they are due to vote on at a November 23 meeting. Without the Saudi-led group, Credit Suisse would have to issue even more shares to raise the $4 billion it needs through a rights issue alone. The full dilution then would be 40 percent.

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Commercial 19kg LPG cylinder price slashed by Rs 115.50

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Price of a 19-kg commercial LPG cylinder in the national capital is now Rs 1,744 from Rs 1,885, as per a price notification from state-owned fuel retailersCommercial 19kg LPG cylinder price slashed by Rs 115.50

The price of commercial liquid petroleum gas (LPG) cylinders was slashed by Rs 115.50 on November 1. A 19-kg commercial LPG cylinder will now cost Rs 1,744 in the national capital.

This is the first price fluctuation in commercial LPG cylinder prices by oil marketing companies (OMCs) since the prices were last raised in May. OMCs usually announce LPG price change at the beginning and middle of each month.

There is no change in the price of the 14.2 kg domestic LPG cylinder, which now cost Rs 1,053, as per the price notification from state-owned fuel retailers.

The price of a 19-kg commercial cylinder will now be Rs 1,846 in Kolkata, Rs 1,696 in Mumbai and Rs 1,893 in Chennai. You can look for the price in each city and district here.

Meanwhile, CNBC Awaaz reported that OMCs may also cut petrol and diesel prices by 40 paise from November 1.

According to the report, a reduction in oil prices by 40 paise is likely to occur daily for the next five days. That will bring a total reduction of Rs 2 in petrol and diesel prices in instalments.

OMCs suffer losses

Indian Oil Corporation had on October 29 reported a net loss of Rs 272.35 crore for the July-September quarter (Q2) despite booking over Rs 10,800 crore of government LPG subsidy, on the back of selling petrol, diesel below cost.

The net loss of Rs 272.35 crore compares to a profit of Rs 6,360.05 crore in July-September 2021, according to a company's filing with the stock exchanges.

The decline comes on the back of a Rs 1,992.53-crore loss incurred in the previous April-June quarter. This is the first time that IOC has booked losses in two straight quarters as it sold petrol, diesel and cooking gas (LPG) at rates below cost.

IOC, as well as other state-owned fuel retailers, had booked heavy losses in the first quarter of the current fiscal and did not revise petrol, diesel and cooking gas LPG prices in line with the cost to help the government contain runaway inflation.

The three firms, who are supposed to revise petrol and diesel prices daily in line with the cost, did not change rates for over six-and-half-months now – the longest freeze in rates since fuel pricing was deregulated.

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MPC | November 3 meet a non-event in near term, but important for long term

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The MPC won’t take any rate action at its November 3 meeting. The meeting will merely discuss the report to be sent to government explaining reasons why CPI could not be kept below 6 percent for nine months

MPC | November 3 meet a non-event in near term, but important for long term

The unscheduled meeting  of the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) called on November 3 will likely be a non-event for the markets in the near term, but for the long term this meeting can lay down some healthy precedents.

First, the near-term impact. A section of the market fears that an unscheduled meeting can always include a mid-term rate action. I beg to differ. The press release announcing the meeting makes it clear this meeting has been called only because the MPC has failed to achieve its mandate of keeping inflation between 2 percent and 6 percent for three quarters in a row.

The press release says an additional meeting of the MPC is being scheduled on November 3 under the provisions of Section 45ZN of the RBI Act, and Regulation 7 of the RBI Monetary Policy Process Regulations. Section 45ZN was included in the RBI Act in 2016, by the amendments which created the MPC, and gave it the mandate to keep inflation within bounds decided by the government (currently 2-6 percent).

Two Provisions

Section 45ZN is titled: Failure to maintain inflation target, and states, ‘Where the Bank fails to meet the inflation target, it shall set out in a report to the Central Government — (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by the Bank; and (c) an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.’

The other provision under which the meeting is called is Regulation 7 of the MPC Regulations. Regulation 7 is titled: Process to be followed in the event of a failure to meet the inflation target. The clause reads: ‘The Secretary to the Committee shall schedule a separate meeting as part of the normal policy process to discuss and draft the report to be sent to the Central Government under the provisions of Section 45ZN of the Act. The Report shall be sent to the Central Government within one month from the date on which the Bank has failed to meet the inflation target. The Bank shall send the report to the Central Government in the event of a failure to achieve the target as specified by Rules of the Central Government, in this regard.’

From the above two clauses it is clear that this meeting has been called only to draft the report to the government to explain why the MPC failed to keep inflation under 6 percent for three quarters. The September CPI number was announced on October 12. Coming at 7.41 percent, it became the ninth consecutive month of the CPI over 6 percent. Now, as per Regulation 7, the RBI has to send its explanatory report to government in one month, i.e. by November 12.

Timing Of The Meeting

The market’s worry stems in part from the timing of the meeting. Why didn’t the committee meet earlier? Why only a day after the FOMC meeting.

Here’s why: Immediately after October 12, the top brass of the RBI was away in Washington to attend the IMF-World Bank meetings. Then came the Diwali holidays. Hence the first week of November.

The day after the FOMC meet, is most likely a coincidence. The November 1-2 FOMC meeting dates were known well in advance, and the fact that it will most likely be a 75 bps hike was also known on September 22, when the US Fed published its dot-plot. Which means, the RBI and the MPC were aware, during their September 30 meeting that the US Fed would hike rates by 75 bps in November. Why call an unscheduled meeting to react to known data.

Also the inflation in the latest US Personal Consumption Expenditure (PCE) data — the measure that the US Fed follows for setting rates — came in at 5.1 percent, a tad lower than the 5.2 percent anticipated by the street. This is expected to make the US Fed confirm that it will step off the 75 bps hikes rhythm, and slow to a 50 bps hike in December. If that is the case, again, why should the RBI call for an unscheduled meeting? In any case the PCE data came on October 28, after the RBI had put out the November 3 meeting press release. Finally, the RBI and the MPC members have re-iterated that they don’t let external events influence their rate action. The rates are set to respond to domestic inflation only.

Therefore, to repeat, the MPC won’t take any rate action at its November 3 meeting. The meeting will merely discuss the report to be sent to government explaining reasons why CPI could not be kept below 6 percent for nine months. In all probability, this part of the report is easy to guess. The RBI will refer to the supply side constraints due to COVID-19, and the Ukraine war. It may also argue that inflation in most other countries is running way above their targets. The US CPI has been at 8-10 percent in 2022, versus a mandate of 2 percent. Likewise for the Eurozone, and the United Kingdom.

Point C

As for remedial measures, the RBI is again on firm ground: it can state that it has mostly rolled back excess liquidity provided during the pandemic, and even front-loaded the rate hikes. It may well say with some certainty that inflation will fall below its tolerance band of 6 percent by March.

For me the most interesting part is the point ‘c’ of the Section 45ZN, as per which the RBI has to state by when inflation will fall to ‘target’. This means the RBI will not only have to say when the CPI falls below 6 percent, but when it will come down to 4 percent — the given target. The governor has said in some interviews that this may take up to 2024. But it will be interesting to see what the RBI writes in the official report.

This report would have been more important if the MPC members, especially the external members, are extremely upset by the failure to keep the CPI within the mandate. Then one would have expected fiery rate hikes. But the last minutes of the MPC show that at least two members — Jayant Varma and Ashima Goyal — are the most dovish of the six. Varma is actually asking for rate hikes to stop at 6 percent. This also demolishes any speculation that there may be a rate hike on November 3.

Long Term Impact

The bigger question is, will the report be made public. The RBI Governor has stated that the contents are privileged, and meant for the government only. So, to be sure, the RBI won’t release the report. It will be interesting to see if the government releases the report.

Herein lies the long term impact of the November 3 meeting. The government making the report public will greatly add to transparency, and will be a healthy convention for the future. If the report is not divulged, the market will continue to speculate on its contents, and it may get volatile. It can raise doubts about the RBI’s independence, and the efficacy of the entire inflation-targeting mandate. Divulging the contents of the report can lead to a healthy debate on whether the RBI and the MPC were behind the curve, and hence missed their mandate, or whether they were sensible in not getting bogged down by the letter of the law, but give more weight to the macro realities of weak growth due to an unprecedented pandemic.

Hence, in the near term, for the markets, the November 3 meeting is likely to be a non-event. But in the long term, it can be an occasion to establish some healthy precedents.

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