The Reserve Bank of India’s decision to retain a neutral monetary policy stance impacted market sentiment on Thursday with the BSE Sensex crashing 192.40 points, the rupee falling 76 paise and yields on the benchmark 10 year security gaining around 8 basis points.
At the forex markets, the rupee closed lower at 69.17 against the dollar after rallying for three days. The domestic unit opened at 68.56 per dollar and fell further to touch the day’s low of 69.21. It finally settled with a loss of 76 paise over its previous close. The currency had surged 33 paise to 68.41 against the dollar on Wednesday.
At the bond markets, the yield on the benchmark 10 year security rose 6 basis points (yields are inversely related to prices) to around 7.34 per cent. Foreign institutional investors remained net sellers in the capital markets, pulling out Rs 226.19 crore on Thursday, according to provisional data.
Promising to maintain the current fiscal glide path if the BJP-led NDA is voted back to power in the general elections, finance minister Arun Jaitley said the government would lower the taxes.
“I speak in terms of taxation policies... I’m quite clear in my mind that on two issues at least we had — fiscal prudence and lower rates. If we are in power, we will continue the same glide path,” Jaitley said while addressing the CII’s AGM here.
According to the current medium-term fiscal policy, which is part of the 2019-20 interim budget, the fiscal deficit target for 2019-20 is 3.4 per cent and 3 per cent for both 2020-21 and 2021-22.
“If back in office for the next five years, we have to set our targets clear,” he said.
Jaitley also hinted that cement, which is in the 28 per cent GST bracket, will be brought down to a lower bracket soon.
“In the last 20 odd months of the GST, except for cement, tax on every item of consumption has come down to 18 per cent and 12 per cent from 28 per cent so it is only a matter of time that the last one also comes down,” he said.
The general elections will be held in phases beginning April 11 and the counting of votes will take place on May 23.