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Equity Market Review
Equity markets in India and developed countries rose in November while Emerging Markets (MSCI EM) gained significantly, largely on the back of a sharp jump in China. FII flows net inflows gained further momentum in November after turning positive in October.
Debt Market Review
The recent inflation prints in the US, UK and Eurozone read as 7.7%, 11.1% and 10.0%, respectively. Although US CPI came slightly lower than expectations, inflation prints in the UK and Eurozone continue to remain high. The Federal Open Market Committee (FOMC) minutes published, indicated mixed signals from Fed officials, with a majority of officials supporting slowing down the pace of interest rate hikes soon while some other hinting that monetary policy might need to be tightened more than anticipated next year. The European Central Bank (ECB) minutes also indicated that inflation might be getting entrenched, supporting the case for the 75 bps hike undertaken in the previous policy.
RBI Policy
The Monetary Policy Committee (MPC) came out with their bi-monthly policy statement today. Some of the key announcements are as follows:
- The MPC decided by a majority of 5 out of 6 members to increase the policy Repo Rate by 35 bps to 6.25%
- Consequently, the Standing Deposit Facility (SDF) rate was adjusted to 6.00% and the Marginal Standing Facility (MSF) rate and Bank Rate adjusted to 6.50%
- The MPC also decided by a majority of 4 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation remained within the target going forward