G-Secs tumble by Rs.2 -Rupee weakens
Mumbai: The rupee ended marginally weaker at 45.6850/6900 against the dollar. The currency had finished at 45.6350/6450 in the previous closing session.

Forwards Market: The six-month forward closed at 2.77 per cent (2.60 per cent) while the 12-month forward finished at 2.25 per cent (2.05 per cent).

The bond market saw turmoil on Tuesday as prices plummeted up to Rs 2 on certain maturities, with yields touching two-year highs. The prices tumbled with the announcement of the repo rate hike in the mid-term review of the Reserve Bank of India's annual policy statement. According to the market the Repo rate hike, of 25 basis points to 4.75 per cent, signalled the central bank's acceptance of rising interest rates.

G-Secs: The 11-year benchmark 7.38 per cent 2015 paper fell by Rs.2.00 to Rs103.25. Yield on the 10-year benchmark rose to as high as 6.85 per cent during the day. Prices recovered by nearly a rupee towards the end of trading hours as statements from the RBI Deputy Governor, Mr Rakesh Mohan, portraying repo rate hike as a temporary measure with indications of discontinuing MSS if required improved the prices.

Call Rates: Eased off to 4.55-4.60 per cent after touching 4.80 per cent levels earlier.

CBLO Market: 141 trades worth Rs5,955.45 crore were transacted.
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Credit Policy: Bank rate untouched - lower growth projected
Mumbai: The Reserve Bank of India has announced its busy season credit policy keeping the Bank Rate untouched at 6 per cent. The inflation forecast has been raised from 5 to 6.5 per cent. It has reduced the GDP forecast for the financial year 2005 from 6.5 per cent to 7 per cent. The cash reserve ratio (CRR) has also been left untouched.

The bank has discontinued the seven-day and 14-day repo and reverse repo auctions, while asking banks to give more loans to small farmers. The RBI said the farm growth target of 3 per cent for FY05 would not be met, while the trade deficit might widen on higher crude prices. It said deficient rain might hit farm growth this fiscal. On the forex reserves front, the bank said they were comfortable now, but may go slow in FY05. However, it predicted higher foreign direct investment inflows.

The bank said that it would pursue an interest rate environment conducive to macro-economic growth and price stability and maintaining the momentum of growth. The overall stance of the monetary policy for 2004-05 would be provision of appropriate liquidity to meet credit growth and support investment and export demand in the economy while placing equal emphasis on price stability. Banks have been allowed to fix the ceiling on interest rates on FCNR(B) deposits on a monthly basis.
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RBI raises risk weightage on home loans
Mumbai: The Reserve Bank of India has raised the risk weight that banks will have to assign on home loans to 75 per cent from 50 per cent and on consumer credit to 125 per cent from 100 per cent.

In the Mid-Term Review of the Annual Policy Statement, the central bank has said, "It is observed that in the recent past, the growth of housing and consumer credit has been very strong. These measures have been proposed as a temporary counter cyclical measure."

RBI had earlier cautioned commercial banks on the aggressive growth of their housing portfolios. Over the past couple of years, banks have been aggressively and profitably pushing retail credit and housing loans, in particular, due to the absence of any `greenfield' projects to deploy their funds.

Competition in the housing loan segment assumed serious proportions with the aggressive slashing of interest rates by banks, in order to capture larger volumes of business, according to industry analysts. However, in the past year, concerns have emerged about the quality of home loans and the increase in non-performing assets in this sector.
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Govt. to complete market borrowings programme
New Delhi: The Finance Minister, P. Chidambaram, has said that the Centre would go ahead with its market borrowings programme for the current fiscal, even as the cost of governmental borrowings is showing a rising trend.

"We have to borrow what we have planned to borrow. We will complete the borrowings programme and borrow at whatever rate the market decides," Mr Chidambaram told newspersons here.

At the same time, he ruled out the possibility of governmental borrowings `crowding-out' borrowings by corporates, leading to an overall increase in interest rates.

As on October 21, the Centre has completed gross market borrowings of Rs 75,044 crore, corresponding to 49.8 per cent of the budgeted amount for 2004-05.

The Finance Minister has welcomed the overall policy stance taken by the RBI as being "in broad agreement with our approach" and "there is nothing in it that will discourage investment or hamper growth".
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Cholamandalam Investment Q2 net up
Chennai: Cholamandalam Investment and Finance Company has reported a net profit of Rs8.6 crore for the quarter ended September, compared with Rs8.35 crore in the same quarter of last year.

In a press release, Cholamandalam Investment has said that in the first six months of the current year, the company posted a growth of 18 per cent in disbursements. Total disbursements for the period were Rs509 crore. The company's gross asset base, including securitised assets, grew by 13 per cent to Rs1,843 crore.

For the half-year, the company has reported a net profit of Rs18.02 crore against Rs17.60 crore previously. The company's capital adequacy ratio stands at 18 per cent of its risk-weighted assets, against the RBI's requirement of 12 per cent, stated a press release.
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