• 08 APR
  • Knight Snippet
  • 08/04/2021

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 08-Apr-2021.

International Market:-  
- The FOMC’s March meetings showed that participants were seeing signs of an economic rebound and a pickup in inflation but still believed they were a long way from altering their interest rate policy or asset purchasing program
- Following the FOMC  minutes, US bond yields are consolidating
- US 10-year closed at 1.68% and 30-year closed at 2.32% on Wednesday

Crude Oil Market:
- Crude is trading at $62.72/bbl
- Crude short term range: $63-66

Currency Market:
- Dollar index (DXY) is at: 92.43
- DXY today's range: 92.25 - 92.76
- USDCNY or Chinese yuan is at 6.55
- USDINR with a low of 73.52, closed at 74.47
- USDINR range: 74.20 - 74.50
- Here are the reasons for the drastic move:  

#1: The Indian central bank announced a new bond-buying program called G-SAP, under which it will purchase Rs 1 lakh crore in government securities via the secondary market. Some see this as a QE-like move, which would be negative for the currency

#2: other factors as well such as unwinding of positions in the offshore non-deliverables forwards market, which is used by foreign investors to hedge currency risk

Domestic Market:

Let's look at RBI's MPC policy actions first today:

#1: Repo unchanged at 4.00% and Reverse Repo unchanged at 3.35%

#2: Policy Stance accommodative

#3: MPC kept its growth outlook for FY22 unchanged at 10.5% but warned of downside risks, particularly from the second wave of Covid-19 infections.

#4: CPI Projections were well below MPC's inflation targets, but acknowledges the supply-side pressure on inflation

Now, here is the interesting news for Bonds:

RBI announced the G-SAP which is Govt Securities Acquisition Program, which is more like QE in nature
- Here, RBI has announced G-SAP 1.0, where RBI will buy Rs. 1 Lakh Cr in Q1-FY22 and has promised to do more if needed
- Govr also stated that From Jan-March-21, liquidity was abundant and Rs. 4.9 Lakh Cr on avg were parked in Reverse Repo
- To address this liquidity, longer tenor variable rate reverse repo operations will be carried out. The timing and tenor of these will be dependent on liquidity conditions.  
-Govr categorically reiterated, that this should not be seen as liquidity tightening.

In short, RBI  showed a change of approach, there was an visible shift in the forward guidance from “time-dependent” to “state-dependent” for transitioning from accommodative to gradual calibrated normalization

5.15 GS 2025 closed at 5.60% Vs 5.57% the previous trading day;  

5.85 GS 2030 closed at 6.08% Vs 6.12% the previous trading day;

Remember, we had given a scenario analysis yesterday whereby we had given a high probability on positive momentum with 6.08% on cards?  

RBI made it possible, quantitative models saw it through before it came.

Yesterday:

- Public sector banks sold heavily with net Rs. 2,769 Cr  
- But, this was absorbed by private sector banks with Rs. 2,388 Cr
- Again, MF houses bought Rs. 1,070 Cr

Now, with this extra QE or G-SAP  brings a lot of confusion, a lot of questions for the investors and there is no single solution.  

Reach out to us for your HTM <> AFS shifting.  

Again, Knight Research had deliberately taken a decision to hold back HTM <> AFS shifting and asked all the clients to wait, now it is time to make the change with this new G-SAP in place.

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
Stock Investment by Foreigners   [JP] 977.6 640.9 13/04/21 15/04/21
Interest Rate Decision   [KR] 0.50 0.50 13/04/21 15/04/21
Exports FEB   [US] 190,127 191,944 01/04/21 07/04/21
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
Employment Change MAR   [ A] 88,671 70,706 13/04/21 15/04/21
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
Import YoY MAR   [ID] 13,265 16,787 13/04/21 15/04/21
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
WPI Manufacturing YoY MAR   [IN] 4.17 5.70 13/04/21 15/04/21
Industrial Production MoM FEB   [GB] 0.20 -1.50 09/04/21 13/04/21
Unemployment Rate MAR   [AU] 5.80 5.60 13/04/21 15/04/21
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
WPI Food YoY MAR   [IN] 4.17 5.70 13/04/21 15/04/21
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
Foreign Bond Investment   [JP] 375.1 1,714.4 13/04/21 15/04/21
WPI Inflation YoY MAR   [IN] 4.17 5.70 13/04/21 15/04/21
Cash Reserve Ratio   [IN] 3.00 3.00 01/04/21 07/04/21
FDI (YTD) YoY MAR   [CN] 260.7 448.6 13/04/21 15/04/21

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
6.82% MGSDL 2031 10 Y 200 - 15/04/21 19:28 6.82% 200 Yield 09/04/21 15/04/21 16/04/21
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
6.78% JKSDL 2033 12 Y 500 - 15/04/21 19:30 6.78% 500 Yield 09/04/21 15/04/21 16/04/21
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
6.78% JSDL 2031 10 Y 1000 6.73% - 6.75% 15/04/21 19:29 6.78% 1000 Yield 09/04/21 15/04/21 16/04/21
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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