• 07 APR
  • Knight Snippet
  • 07/04/2021

Transcript

Good Morning Treasurers,

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 07-Apr-2021.

International Market:-  
- FOMC Meeting minutes are due Wed afternoon, which will give a clue on the economy
- US 10-year closed 6bps down at 1.67% and 30-year was down 4bps closing at 2.33% on Tuesday
- As we have been saying, 1.75% acts as a strong immediate support for US 10-year, beyond which it will open the doors for 2.00%, which is certain

Crude Oil Market:
- Crude is trading at $63.06/bbl
- Crude short term range: $63-66

Currency Market:
- Dollar index (DXY) is at: 92.27
- DXY today's range: 92.18 - 92.76
- DXY has breached 92.45 key level, which was 200DMA
- USDCNY or Chinese yuan is at 6.54
- USDINR with a high of 73.42, closing at almost same 73.42 level on Tuesday
- USDINR range: 73.25 - 73.55
- We anticipated a move towards 73.10 yesterday, but it did not happen and retreated from 73.20
- Though our models are still indicating a move towards 73.10, so we will wait and watch. But, market is the ultimate king who dictates
- Structurally, we would NOT recommend to GO LONG on USDINR now as the DXY rally is over and there is no steam left
- Hence, for all positional traders, when USDINR was at 72.70, we had predicted 73.50-74.00 range, they can book profits now

 Domestic Market:

5.15 GS 2025 closed at 5.57% Vs 5.57% the previous trading day;  

5.85 GS 2030 closed at 6.12% Vs 6.12% the previous trading day;

Yesterday:
- Foreign Banks sold G-Sec worth Rs. 2,560 Cr
- But, MF houses bought Rs. 1,733 Cr, deploying new funds
- RBI Govr Mr. Shaktikanta Das will address MPC decision at 10.00a.m.

- Expectations:

#1: Status-quo: No change in repo, reverse repo

#2: Stance will continue to stay accommodative

#3: Everyone will be very concerned about the guidance

- Till now, MPC was practicing the time-line based guidance
- Will RBI MPC change the time-line based guidance to state/situation-based guidance as COVID-19 worries are resurfacing and derailing the growth?

In our, Knight Fintech's internal models, we have changed the timelines for 6-months at least where we were expecting a liquidity reversal. It may take longer now.  

Scenario#1: (Base case, high probability)
- Market likes time-line based guidance, which is certain and predictable
- If RBI Govr assures the market enough on the liquidity and pushes back the time-lines, market will cheer  

Outcome: We expect 2-4 bps positive momentum and 5.85 GS 2030 can touch 6.08% also

Scenario#2: (Low probability)
- RBI Govr fails to reassure the markets somehow, or market feels the measures are unadequate

Outcome: 5.85 GS 2030, may go towards 6.15
- In a nutshell, we expect this RBI MPC to be a non-event and expect 2-3bps movement in either direction
- Probability is higher on 5.85 GS 2030 crossing 6.11 resistance and touching 6.08
- If 6.08 comes, do not wait to SELL as selling will emerge

SDL borrowing calendar is out, and we advise clients to skip this week's participation.  

 That's it for today.  You were listening to Knight Snippets with Parthesh Shah from Knight Fintech.

See you tomorrow with a new episode of Knight Snippets.

Macro Economic Events

Indicator Last Expected AsOn Next
Import YoY MAR   [CN] 1,670 1,986 09/04/21 13/04/21
Exports FEB   [US] 190,127 191,944 01/04/21 07/04/21
Inflation Rate YoY MAR   [RU] 5.18 5.67 01/04/21 06/04/21
Inflation Rate YoY MAR   [IN] 0.0000 0.0000 09/04/21 12/04/21
Manufacturing Production YoY FEB   [IN] -2.00 -3.20 09/04/21 12/04/21
Balance Of Trade MAR   [CN] 653.9 378.7 09/04/21 13/04/21
Reverse Repo Rate   [IN] 3.35 3.35 01/04/21 07/04/21
Inflation Rate MoM MAR   [RU] 0.67 0.78 01/04/21 06/04/21
Industrial Production YoY FEB   [IN] -1.60 -2.80 09/04/21 12/04/21
Consumer Credit Change FEB   [US] 8.79 -1.37 01/04/21 08/04/21
RBI Intrest Rate Decision   [IN] 4.00 4.00 01/04/21 07/04/21
Balance Of Trade FEB   [GB] -6,202 -1,630 09/04/21 13/04/21
Balance Of Trade FEB   [US] -66,969 -68,213 01/04/21 07/04/21
Current Account FEB   [JP] 1,166 647 01/04/21 08/04/21
Jobless Claims 4 Week Average   [US] 729.5 719.0 01/04/21 08/04/21
GDP MoM FEB   [GB] 0.60 -2.90 09/04/21 13/04/21
Markit Services PMI MAR   [IN] 55.3 54.6 01/04/21 07/04/21
Markit composite PMI MAR   [IN] 57.3 56.0 01/04/21 07/04/21
Consumer Confidence MAR   [JP] 29.6 33.8 01/04/21 08/04/21
Industrial Production YoY FEB   [GB] 0.0000 -4.9000 09/04/21 13/04/21
Manufacturing Production MoM FEB   [GB] 0.50 -2.30 09/04/21 13/04/21
EXPORT YoY MAR   [CN] 2,640 2,049 09/04/21 12/04/21
Industrial Production MoM FEB   [GB] 0.20 -1.50 09/04/21 13/04/21
Consumer Inflation Expectation MAR   [US] 3.05 3.09 01/04/21 06/04/21
Household Spending YoY FEB   [JP] -0.60 -6.10 01/04/21 06/04/21
Initial Jobless Claims   [US] 658.0 719.0 01/04/21 08/04/21
Stock Investment by Foreigners   [JP] -79.0 -852.4 01/04/21 08/04/21
Foreign Exchange Reserves   [JP] 554.4 200.7 01/04/21 08/04/21
Manufacturing Production YoY FEB   [GB] -2.50 -5.20 09/04/21 13/04/21
Import FEB   [US] 257,096 260,158 01/04/21 07/04/21
Household Spending MoM FEB   [JP] 2.80 -7.30 01/04/21 06/04/21
Cash Reserve Ratio   [IN] 3.00 3.00 01/04/21 07/04/21

Auctions

Knight Statistical Poll vs. Actual Results
Security Name Tenure Notified Amount Expected
Cut-Off
Recommended At Actual-Cut-Off Amount Accepted Auction Type Announcement date Auction Date Settlement Date Source
91 DTB 07/07/2021 91 D 15000 3.40% - 3.45% 07/04/21 13:47 3.3505% 15000 Yield 01/04/21 07/04/21 08/04/21
5.63% GS 2026 5 Y 110000 5.57% - 5.60% 09/04/21 16:20 563% 73 Yield 05/04/21 09/04/21 12/04/21
91 DTB 12/07/2021 91 DTB 15000 3.34% - 3.37% 12/04/21 14:11 3.3496% 15000 Yield 08/04/21 12/04/21 15/04/21
182 DTB 06/10/2021 182 D 15000 3.55% - 3.60% 07/04/21 13:47 3.5906% 15000 Yield 01/04/21 07/04/21 08/04/21
6.78% APSDL 2038 17 Y 1000 6.85% - 6.90% 08/04/21 16:18 6.78% 1000 Yield 06/04/21 08/04/21 09/04/21
5.94% RJSDL 2025 4 Y 1000 5.90% - 5.95% 08/04/21 16:19 5.94% 1000 Yield 06/04/21 08/04/21 09/04/21
364 DTB 11/04/2022 364 D 6000 3.72% - 3.76% 12/04/21 14:12 3.7600% 6000 Yield 08/04/21 12/04/21 15/04/21
364 DTB 06/04/2022 364 D 6000 3.80% - 3.85% 07/04/21 13:48 3.7393% 6000 Yield 01/04/21 07/04/21 08/04/21
6.75% RJSDL 2031 10 Y 1000 6.75% - 6.80% 08/04/21 16:10 6.75% 1000 Yield 06/04/21 08/04/21 09/04/21
6.78% APSDL 2039 18 Y 1000 6.85% - 6.90% 08/04/21 16:09 6.78% 1000 Yield 06/04/21 08/04/21 09/04/21
6.64% GS 2035 14 Y 10000 6.60% - 6.62% 09/04/21 16:22 6.64% 13879 Yield 05/04/21 09/04/21 12/04/21
6.67% GS 2050 30 Y 7000 6.75% - 6.80% 09/04/21 16:21 6.7895% 7953 Yield 05/04/21 09/04/21 12/04/21
182 DTB 11/10/2021 182 D 15000 3.58% - .60% 12/04/21 14:12 3.6085% 15000 Yield 08/04/21 12/04/21 15/04/21

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