US Fed Retains Rate, Bajaj Finance Q3 Earnings, SEBI Clarification On Finfluencers | Rise With Profit
NDTV Profit Podcast: From US Fed's rate decision to SEBI's clarification on finfluencers, here's all you need to know to start the day ahead of the curve.
Good morning!
This is the daily morning update from NDTV Profit. We’ve got lots to talk about, so let’s get straight to the top news so you can start the day ahead of the curve.
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The US central bank has maintained its benchmark interest rate after slashing it three times in a row. The decision was based on consensus. This marks the committee's first policy meeting since Donald Trump assumed office as US president on Jan. 20.
In the last policy meeting, in December, the Federal Open Market Committee had reduced the federal funds rate target by 25 basis points, bringing it to a range of 4.25% to 4.5%.
The FOMC statement said that US economic activity has continued to grow at a steady pace. The statement read, "The unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid.” It added that inflation remains somewhat elevated.
Meanwhile, in his post policy press meeting, Federal Reserve Chair Jerome Powell said officials are not in a hurry to lower interest rates, adding that the central bank is pausing to see further progress on inflation, following a string of rate reductions last year. But he also said that the central bank still has a long way to go in reducing its benchmark interest rate towards its longer-run level. He said the current rate was still meaningfully above the so called neutral rate, which doesn’t stimulate or restrict economic activity.
Bond yields didn’t move too much. They’ve already cooled off in the run up to the policy meeting. The yield on the 10-year Treasury is still above 4.5%, while the 2-year yield dropped to 4.22%. Wall Street saw cuts, with the Dow losing about 0.3% and the S&P 500 and Nasdaq dropping about 0.5% each. In the Asia Pacific region, meanwhile, the Japanese Nikkei 225 was lower by 0.4% last I checked. Many markets continue to remain shut for the lunar new year holiday.
Back home, we continue to track earnings. And there were a couple of big ones post market hours. The one that stands out to me was Bajaj Finance Ltd. It saw strong growth in its core income — the net interest income growing 23% — in line with expectations. There was a 17% increase in profit after tax at Rs 4,247 crore, with the return on assets improving by 5 basis points sequentially to 4.5%.
Provisions rose about 7% sequentially and bad loans inched up slightly. But the commentary on credit cost should raise a cheer later today. The company has pegged its credit cost at 2–2.25% in the March quarter and sub-2% for the next financial year on the back of improvement in collection efficiency and prudent loan growth. That’s according to Managing Director Rajeev Jain.
In the automotive space, Tata Motors reported a 22% decline in net profit, which missed consensus estimates. A contraction in JLR’s operating profit margin seems to have weighed on the overall business. But it posted a net profit as against a loss in the comparable quarter, so that’s a positive. The consolidated margin was lower by 240 basis points at 11.5% and it came in considerably below consensus estimates, which had pegged it at 13.3%.
In other news, the government is not seeing a reason for concern emerging from US President Donald Trump's repeated tariff threats against several nations including India, according to sources. Top government sources have indicated that there is nothing pointed towards India adversely so far that will hurt trade dynamics.
In regulatory news, the Securities and Exchange Board of India came out with further clarifications on the finfluencer regulations. The document on the SEBI website mentions that brokers, mutual funds, investment advisers, exchanges and other market participants cannot be associated with unregistered influencers, either directly or indirectly. This association includes any financial back and forth, client referrals, sharing of customer information and using services for marketing or promotions. In fact, SEBI has also mentioned that working with an agency that partners with influencers is also banned.
