Good Morning Listeners,

This is your host Parthesh Shah, Co-Founder of Knight Fintech and you are listening to Knight Snippets.

Here is all what you need to know before going into trade for 28th-Sep-2020.  

International Market:
- In the US market, the bond rates for 10 and 30-year bonds have been falling consistently for the past 3 out of 4 weeks on account of spike in COVID-19 cases and uncertainty over fiscal stimulus

- On Friday, the US 10-year closed at 0.66% and 30-year at 1.40%

- Us 10-year Benchmark Range: 0.66% - 0.69%

Crude Oil Market:
- No major market moving news in crude oil and is stable at $41.77/bbl

- View: Neutral; Long-Term positive with $50/bbl target in 3-6 months

Currency Market:
- Dollar index at 94.52  

- Once again, dollar breached our target of 94.46 and now the next target is 94.80

- Today's dollar range: 94.26 - 94.72

- USDCNY or Chinese yuan is at 6.82

- With rising COVID-19 cases in Europe, dollar is again becoming traders' favorite and dollar momentum is seen

- On Friday, Indian Rupee closed at 73.70 with a high of 73.91

- Today's USDINR range: 73.62 - 74.06

Domestic Market:
- The much awaited borrowing calendar can be announced today

- Let's try to decipher last time, the borrowings so far:

In first half of the year:
Centre had planned to borrow Rs. 6.98 Lakh Cr vs it has actually borrowed Rs. 7.66 Lakh Cr

States on the other hand had planned to borrow Rs. 3.05 Lakh cr vs they have actually borrowed Rs. 3.25 Lakh cr

- In short, both center and states combined, the planned borrowing for first half was Rs. 10 Lakh Cr, and actual borrowing has been Rs. 10.9 Lakh cr

- Not much deviation, but that was in NO_COVID scenario

- GST shortfall-has been ~ Rs. 20,000 Cr/month, translating to Rs. 2.5 Lakh Cr shortfall in revenue

- For second half of the year, the center is expected to borrow Rs. 6 Lakh cr instead of Rs. 5 Lakh cr previous assumption

- So, the additional borrowing will come for sure, the question is: Whether the RBI decides to borrow now or later in the last quarter assessing full COVID impact

- On the contrary, states will need to borrow a mammoth - Rs. 6.25 Lakh cr in the second half, which will be almost double than the first half

Hence, we are of the view that, instead of buying SDLs now, we can wait for increasing our SDL allocations once the borrowing becomes clear.  

We clearly envision SDLs trading above 7.00% anytime soon. If not in next 1 month, then certainly in the next 3-5 months

 Much has been communicated by RBI via OMOs and auction, but that my dear listeners is a topic for diffrent day.  

We all are awaiting RBI's stance on additional borrowings and OMO support to keep the yields in check.

Important Note:
We have spoken a lot and majority of our clients are out waiting on sidelines.

We repeat, last chance to square-off all of your risky trades today before the Oct-March borrowing calendar. This event-risk is not worth taking.  

Last one more point:  
Do you know that states in tomorrow's auction will borrow mammoth Rs. 25,437 Crs?

After today's borrowing calendar, tomorrow's state auction will be a key challenge.  That's it for today.  You were listening to Knight Snippets with Parthesh Shah, Co-Founder of Knight Fintech.

See you tomorrow with the new episode of Knight Snippets.