India In-Focus — Shares fall; Headline inflation may ease below 6% by March; Toyota reboots strategy for India 

RIYADH: Indian shares fell on Monday, dragged by tech and bank stocks, while worries of global economic growth kept investors on tenterhooks.

The NSE Nifty 50 index was down 0.76 percent at 17,622.75 as of 0400 GMT, while the S&P BSE Sensex dropped 0.67 percent to 59,245.18.

India’s Nifty IT index fell 1.1 percent while the Nifty Bank index was down 1.4 percent.

Kotak Mahindra Bank was the top percentage loser on the NSE index with a 2.7 percent fall.

India’s headline inflation may ease below 6 percent by March: analysts 

India’s headline retail inflation may ease below 6 percent by the fourth quarter of this financial year, bringing an end to the current cycle of rate hikes, analysts said over the weekend.

Following the release of minutes from the central bank’s monetary policy committee on Friday, analysts said the Reserve Bank of India may hike repo rates by 50-60 basis points by December.

“We expect the RBI to deliver two 25 bps rate hikes at the September and December meetings, taking the repo rate to 5.90 percent,” Rahul Bajoria, chief India economist at Barclays said.

Bringing retail price rise closer to RBI’s target of 4 percent was essential to sustain economic growth over the medium term, the committee said.

Some analysts said a steep 50 basis points increase in repo rate was also possible next month.

“The possibility of a 50 bps hike in September can’t be ruled out, if the US Fed delivers another 75 bps hike,” Gaura Sen Gupta, India economist at IDFC First Bank said in a note.

Earlier this month, the RBI raised the bank’s key lending rate by 50 bps to 5.40 percent, its third increase in four months to curb rising price pressures.

The RBI has hiked the repo rate by 140 basis points since May.

Toyota doubles down on its hybrid bet in India

Toyota is rebooting its strategy for India, doubling down on a bet that emerging markets will learn to love its hybrids.

Renowned for its pioneering Prius, the Japanese carmaker has struggled to sell large numbers of its hybrid Camry sedan since its Indian debut in 2013, partly due to a sticker price of more than eight times the annual income of a middle-class family.

This time, Toyota is determined to do it differently with lower-cost hybrids, said four company and industry executives and suppliers who provided previously unreported details about the carmaker’s sourcing, production and pricing strategy.

Central to the strategy is a drive to cut the cost of full hybrid powertrains by making them in India, where the automaker’s factories are running well below capacity, and to source key materials within the country.

Toyota Motor is also leveraging its cooperation with partner Suzuki Motor, majority owner of India’s biggest carmaker Maruti, to benefit from its low-cost engineering know-how and mild hybrid technology.

“The hybrid bet is a turning point. It will be a litmus test for Toyota’s future and success in India,” one person with direct knowledge of Toyota’s plans told Reuters.

A full hybrid can be driven for stretches on electric power whereas mild hybrid technology only supplements the combustion engine to help cut emissions. However, mild hybrids have smaller batteries and cost far less.

(With input from Reuters)