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

Transcript

Good Morning Treasurers,

This is your host Priyancka Mahore, AVP 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 Priyancka Mahore 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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