Rise With Profit: US Fed Rate Cut, ED Probe On Amazon, Flipkart Vendors | Podcast

Good morning!

Happy Friday to you. This is the daily morning update from NDTV Profit. Here's everything you need to know at the start of the end of your week.

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The big story overnight is the result of the Federal Reserve Open Market Committee meeting, close on the heels of Donald Trump's victory in the US Presidential election.

The US Federal Reserve on Friday cut its benchmark interest rate for the second time in a row, in line with market expectations and official projection. The Federal Open Market Committee reduced the federal funds rate target by 25 basis points to between 4.50% and 4.75% at the conclusion of its two-day meeting. The decision was based on consensus. In its statement, the Fed stated that US labour market conditions have "generally eased" since earlier in the year and the unemployment rate has moved up but remains low. Also, "Inflation has made progress toward the Committee's 2% objective, but remains somewhat elevated."

In his post policy address, Fed Chair Jerome Powell said that the inflation data was not terrible, but higher than expected, despite moving closer to the 2% target. He also acknowledged that lowering rates too quickly could hinder progress in getting inflation in the US down. Similarly, cutting rates too slowly “could unduly weaken economic activity and employment". Instead, he asserted that the Fed is not on a pre-set course.

There was quite a bit of action in the markets overnight after the Fed decision. Equity markets in the US mostly climbed. The S&P 500 and the Nasdaq gained 0.7% and 1.5%. Simultaneously, bond yields, which had spiked earlier in the week, fell. The 10-year Treasury yield dropped about 10 basis points to 4.35%.

In news back home, the initial public offering of Swiggy was subscribed 0.35 times, or 35%, as of 5:00 p.m. on its second day of bidding on Thursday.

In other news, Mahanagar Gas Ltd. will form a joint venture with US-based International Battery Co. to manufacture lithium-ion batteries in India. MGL signed a share subscription agreement and a shareholding agreement with the battery firm to invest Rs 230 crore in International Battery Company India, which is currently a 100% subsidiary of IBC. MGL intends to take at least 40% stake in IBC India, it said.

The Enforcement Directorate has launched a probe against at least a dozen of prominent vendors of e-commerce giants Amazon and Flipkart, for allegedly violating forex rules, a senior ED official told NDTV Profit. The federal agency is examining certain transactions done by some prominent vendors of the e-commerce giants, particularly during the festive sales.

The Supreme Court has chastised the insolvency tribunals for not carrying out their work efficiently. In the judgement where it ordered the liquidation of Jet Airways, it said that the NCLTs and the NCLAT must seriously rethink their approach towards admission and disposal of insolvency matters. They should not act as a rubber-stamping authority, it said.

And finally, some more international news that you should be aware of. Applications for US unemployment benefits picked up last week, remaining near average pre-pandemic levels. Initial claims increased by 3,000 to 221,000 in the week ended Nov. 2. That was roughly in line with the median forecast in a Bloomberg survey of economists.

And there's more monetary policy action. The Bank of England cut borrowing costs for the second time this year, but stopped short of signaling faster easing, warning that the budget could drive up inflation by as much as half a percentage point. Eight members of the Monetary Policy Committee, led by Governor Andrew Bailey, voted to lower the benchmark interest rate by a quarter point to 4.75%.