RBI cuts repo rate by 25bps, lowers GDP forecast to 6.1% from 6.9% earlier. ED raids six locations in PMC bank scam. RBI relaxes withdrawal limit for customers of PMC bank. India services sector PMI slips to 19-month low in September. Zomato looking to raise $600mn in latest funding round, eyes c. $3bn valuation. Revenue surges 225% in the past six months.
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It's a Cut!: As per popular consensus, the RBI today cut the repo rate by 25bps from 5.40% to 5.15%. All members of the RBI's MPC voted to reduce the policy repo rate, while continuing with an accommodative stance. RBI
This is the fifth consecutive time RBI has cut the lending rate this year, taking the cumulative cuts so far this year to 135bps.
Zooming Out: The rate cut comes as an attempt to spur the slowing Indian economy and boost subdued domestic consumption and private investment, especially in the backdrop of weakening global economic activity and reduced crude oil prices. RBI Press Release
Cut...Cut...Cut: The RBI also cut GDP growth forecast for the current fiscal year to 6.1% from 6.9% earlier. The benchmark indices, BSE Sensex and NSE Nifty ended over 1% lower on the back of the news. Hindu BusinessLine
Spectrum Issues: 4G spectrum auctions are set to kick off soon and the time is of utmost relevance to Reliance Jio, 17 of whose airwaves in the coveted 800 Mhz band will expire in July 2021 and one in August 2021.
Meanwhile: Bharti Airtel and Vodafone Idea would also need to buy back their expiring airwaves in eight circles each, but mostly in the less expensive 1800 MHz band, also used for 4G.
The situation currently facing Jio is identical to the one faced by its opponents in 2014 where Bharti Airtel and formerly known Vodafone India and Idea Cellular (now Vodafone Idea) had to buyback their own expiring spectrum at exorbitant rates, in turn increasing their debt. ET Telecom News
In Other News: Reliance Jio’s feature smartphone - Jio Phone will now be available at a low price of INR699 vs its previous price of INR1095. Livemint
Swimming in Money: Online food delivery platform Zomato is looking to raise $600mn in a new round of fundraising led by existing investor Ant Financial. This will make Ant Financial the largest shareholder in Zomato with their stake touching 29% mark and bump up Zomato’s valuation to $3bn. ET Tech
Zomato reported a 225% rise in revenue in the past six months. The food delivery platform is clocking over 214 million orders in H1 FY 2020 vs 55 million orders last year. Zomato
Interestingly, the report also showed a shift in people's eating habits where they disclosed that a user is likely to order food 3.6 times in a month today compared to 3.1 times last year.
It also talked about how the company is collecting used cooking oil from restaurants to process it in their facilities and deliver it to biodiesel manufacturing facilities. News18
Rude Awakening: Enforcement Directorate (ED) today filed a money laundering case against PMC bank. ED raided six locations in Mumbai and other adjoining locations. The agency is also probing promoters of Housing Development Infrastructure Limited (HDIL) who held 73% of the bank’s total loans. HT
Minor Relief: RBI gave minor reprieve to the customers of PMC bank. The apex bank relaxed withdrawal limits to INR 25,000 but retained the six months limit. It further explained that a customer can either withdraw the said amount in one go or can do so over a period of six months. India Today
RBI previously has put a limit of INR1,000 on withdrawals from the PMC Bank, on the back of increasing defaults which was later increased to INR10,000.
The What: India Services PMI plunged to 48.7 in September 2019 vs 52.4 in August - the steepest pace of contraction since February 2018.
The Why: The contraction comes on the back of weak demand, softening employment growth, competitive pressures and challenging market conditions. Outlook India
Click here to view India’s Services PMI trend. Trading Economics
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