First time in 48 years, PPF rate could fall below 8%

NEW DELHI : For the first time since the Public Provident Fund was established in 1968, the interest rate on the government-managed saving scheme could fall below 8%. Interest rates on small savings schemes, including the PPF and the Senior Citizens' Saving Scheme, are linked to the government bond yields and are revised every three months. The last interest rate revision on 19 March saw the PPF rate being cut 60 basis points from 8.7% to 8.1%.
Now, given that the average 10-year benchmark bond yield has been nearly 7.5% between March and May, analysts believe the rate for PPF could be cut to 7.75%. "The PPF rate is 25 basis points higher than the 10-year benchmark bond yield. So it could be revised to 7.75% for the next quarter," says Manoj Nagpal, CEO of Outlook Asia Capital. If the PPF rate is indeed cut by 25-35 basis points, this would be the first time that the scheme will give less than 8% in its 48-year history.
However, some experts believe that despite the decline in bond yields, the government will not cut the small savings rate in this quarter. "Given the furore over the rate cut in March, the government may not want to alienate the middle class before the assembly elections in 2017," says a mutual fund manager.




view more

'BUY' or 'SELL' ideas from experts for Friday, 17 June 2016.

Union Bank ofBSE -0.67 % India is a 'BUY' call with a target of Rs 133 and a stop loss of Rs 124

WiproBSE 0.16 % is a 'BUY' call with a target of Rs 568 and a stop loss of Rs 539

Reliance CapitalBSE 0.58 % is a 'SELL' call with a target of Rs 358 and a stop loss of Rs 410

Century TextilesBSE 0.21 % is a 'SELL' call with a target of Rs 605 and a stop loss of Rs 626

GAIL IndiaBSE 0.51 % is a 'BUY' call with a target of Rs 397 and a stop loss of Rs 370

InfosysBSE -0.56 % is a 'BUY' call with a target of Rs 1211 and a stop loss of Rs 1165

NMDCBSE 0.43 % is a 'BUY' call with a target of Rs 98 and a stop loss of Rs 91

IDBI is a 'BUY' call with a target of Rs 76 and a stop loss of Rs 68.50

McLeod RusselBSE 3.21 % is a 'BUY' call with a target of Rs 203 and a stop loss of Rs 188

PidiliteBSE 1.80 % Inddustries is a 'BUY' call with a target of Rs 735 and a stop loss of Rs 690

WiproBSE 0.26 % is a 'BUY' call with a target of Rs 568 and a stop loss of Rs 539

Reliance CapitalBSE 0.72 % is a 'SELL' call with a target of Rs 358 and a stop loss of Rs 410.

view more

India's Best Stock Broker: COMMODITIES

India's Best Stock Broker: COMMODITIES: CRUDE OIL : Oil futures fell as concerns on Europe's demand for the commodity rose with Greece failing to reach an agreement with its...

COMMODITIES

CRUDE OIL: Oil futures fell as concerns on Europe's demand for the commodity rose with Greece failing to reach an agreement with its European lenders on Thursday. This increased the chances of a potential Greece debt default to the IMF. Concerns over a supply glut emerging in the refined products segment lingered a day after the release of US reports that showed inventories of gasoline to have increased unexpectedly by 680,000 in the week ended Jun 19.
--NYMEX Aug futures (a barrel): $59.70 Thursday vs $60.27 Wednesday

GOLD: Gold futures fell for the fifth straight session on the outlook
that the US dollar will strengthen in the days to come. Upbeat data from the US supported expectations of a hike in US interest
rates in September. Further, market players analysed the Greece debt situation with the cash-strapped country failing to reach an agreement with its lenders on Thursday. Concerns arose that if Greece failed to secure financial aid by midnight Jun 30 then it may default on its debt repayment to the IMF. This pointed at further dollar strengthening.
--COMEX Aug futures (a troy ounce): $1,171.80 Thursday vs $1,172.90 Wednesday.

view more

Market

Call : Seen opening slightly above RBI's repo rate on likely demand to meet mandatory reserve needs. 1-day Call. 7.60% vs 6.65-6.75% Tue.

Bonds : May track oil, US yields at open. May take cues from new 2023 bond in when issued trade.10-year bond yield: 7.76-7.81% vs 7.77% Tue.

Rupee : Seen steady to tad down. May eye Asian units, euro. Exporters' dollar sales may continue. Range: 62.6500-63.0500/$1 vs 62.85/$1 Tue.

Stocks: Seen falling further on concerns over MAT, passage of land bill Nifty range: 8300-8450, Tuesday-end: 8377.75, down 70.35 points.

CURRENCIES

EUR/USD: The euro was trading lower against the US dollar as market participants grew increasingly risk averse due to Greek debt default concerns. However, the euro derived some support from media reports that said Greece may have reached an agreement with its creditors regarding its debt settlement.

--$1.0728 per euro today vs $1.0737 Tuesday; $1.0738 Monday

USD/JPY: The Japanese yen was trading marginally higher against the US dollar on the back of robust trade data, which showed the economy posted its first trade surplus in three years.

--119.66 yen per $1 today vs 119.68 Tuesday; 119.24 Monday

view more

CURRENCIES
EUR/USD: The euro recovered marginally after slipping to a fresh 12-year low against the US dollar, as market participants waited for cues from the US Federal Open Market Committee's two-day policy meet that begins Tuesday.
--$1.0525 per euro today vs $1.0500 Friday; $1.0624 Thursday

USD/JPY: The yen was trading with an upward bias against the US dollar ahead of the FOMC's two-day policy meet, where the US central bank is expected to provide more information on the hiking of interest rates.
--121.25 yen per $1 today vs 121.33 Friday; 121.29 Thursday

COMMODITIES
CRUDE OIL: Futures fell sharply Friday, as a monthly report from the International Energy Agency warned that oversupply would continue to push prices downward.  Crude oil prices have been pinned at record lows for several months now as there has been a global supply glut. The global strengthening of the dollar also contributed to the sharp decline in crude futures on Friday.
--NYMEX Apr futures (a barrel): $44.84 Friday vs $47.05 Thursday
 
GOLD: Futures settled marginally higher on Friday, but ended the week registering a 1% loss as the global strengthening of the dollar reduced appetite for the precious metal.
--COMEX Apr futures (a troy ounce): $1,152.40 Friday vs $1,151.90 Thursday

MARKETS
Call : Seen opening tad above RBI repo rate as banks may borrow funds early to meet reserve needs. 1-day call: 7.00-7.50% vs 8.48% 2-day Sat.
Bonds : Crude oil price, US yield may lend cues. Value buying may support prices. 10-yr bond yield: 7.75-7.80% vs 7.80% Fri.
Rupee : Steady to tad up on upbeat trade deficit data. May take cues from euro, NDF, Asian currencies. Range 62.7500-63.1500/$1 vs 62.9650/$1 Fri.
Stocks: Seen weak tracking negative global cues. Nifty range: 8600-8780 Fri-end: 8647.75, down 128.25 points.

view more