Views on the announcement by RBI Governor - Ms. Bekxy Kuriakose, Head - Fixed Income, Principal Asset Management

The RBI Governor issued a Media cum press Release Statement on Outlook on Indian Economy in view of the second wave of COVID resurgence. RBI also announced a series of targeted measures to alleviate stress on the most vulnerable sections of borrowers like individuals, small businesses and MSMEs. Measures to incentivize banks to lend to Emergency Health Services were also taken in the form of a Rs 50,000 cr term liquidity facility. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs) to the tune of Rs 10,000 cr was also announced. Other measures included increasing States OD (Overdraft) facility and rationalization of compliance of KYC requirements.

Considering the big bang measures undertaken by RBI since March 2020, today's measures are more of incremental specific targeted measures designed to provide relief where required.

For the debt market, the announcement of Rs 35,000 cr of OMO purchases under Gsap 1.0 (Government Securities Acquisition Programme) was a key positive which led to the 10 yr benchmark gilt closing below 6% today. While totally quantum under Gsap 1.0 has already been announced for the quarter April to June 2021, considering RBI's reiteration today that Policy would be channeled to targeting growth impulses market has taken announcements positively.

We expect in the near term gilt prices to remain supported given RBI measures in the backdrop of banking system liquidity and benign short term money market rates.

Source - www.rbi.org.in

The views expressed and information herein are independent views of the Fund Manager(s) and for informative purpose only and under no circumstances should be construed as an opinion or Investment advice. The information contained herein is not intended to be an offer to seek solicitation for purchase or sale of any financial product or instrument. Investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Sponsor, Trustee, AMC, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Source : Equity Bulls

Keywords