Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Economy - MPC holds rates; policy largely non-event - ICICI Securities

Posted On: 2020-12-05 04:12:22 (Time Zone: Arizona, USA)


- MPC holds rates in unanimous vote: In line with our expectation, the Monetary Policy Committee (MPC) kept repo rate unchanged at 4%. Consequently, reverse repo and MSF rates remain unchanged at 3.35% and 4.25% respectively. The decision to keep rates unchanged was taken unanimously.

- Consensus vote on 'accommodative stance' puzzling: While the unanimous vote on repo rate was expected, the consensus vote on stance of monetary policy was a bit surprising. In the Oct 2020 review, new MPC member Prof. Jayanth Varma had noted that if an unforeseeable inflation shock were to hit the economy, the MPC may find it hard to remain accommodative. Since then, inflation has consistently surprised on the upside and growth impulses have proved to be stronger-than-expected. Hence, his vote to keep the stance accommodative is somewhat puzzling. We look forward to the minutes (to be releases on 18 Dec 2020) for more clarity on this.

- Committee ups inflation forecast sharply...: The committee noted that outlook for inflation has turned adverse in the last two months and that price pressures in the economy are spreading. It pointed to supply chain disruptions, high retail margins, and indirect taxes and added that further efforts are required to mitigate supply-side driven inflation. While cereals and vegetables inflation may soften in the coming months, the committee expects other food prices to remain elevated. Accordingly, MPC upped CPI forecast to 6.8% in Q3 and 5.8% in Q4FY21 (implying 6.3% in H2FY21), and 4.6%-5.2% in H1FY22 with risks broadly balanced. This is a sharp revision compared to the Oct '20 review in which the MPC had expected inflation to print 4.5%-5.4% in H2FY21.

- ... and revises growth forecast to -7.5% in FY21; expects positive growth in Q3: Commenting on the fiscal stimulus, the committee added that it is increasingly moving beyond supporting consumption and liquidity and towards supporting growth-generating investment. While it expects activity in contact-intensive sectors to remain subdued for some time, rural demand is expected to pick up further. However, positive impulses are clouded by the possibility of a second wave of infections. In his address, the Governor added that signs of recovery are far from broad-based and dependent on sustained policy support. The committee now expects real GDP to contract 7.5% in FY21, sharply up from -9.5% in Oct '20 review. Interestingly, the MPC expects growth to turn positive from the current quarter itself - it expects 0.1% growth in Q3 and 0.7%in Q4FY21. The confidence interval for H1FY22 is quite wide - the committee expects real GDP to grow 6.5%-21.9% with risks broadly balanced.

- RBI continues to take measures to support growth outside the purview of MPC: The RBI, on its part, continued to take liquidity and regulatory measures to support growth. In today's review, it extended 'On tap TLTRO' to include 26 sectors identified by Kamath Committee up from five sectors announced in Oct '20. Banks can use these funds to buy corporate bonds, CDs, NCDs or to extend loans to targeted sectors. It also allowed regional rural banks to participate in the money market, announced dividend distribution policy for NBFCs, prohibited banks from making dividend pay-outs for FY20 and announced several measures to support exporters.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Wipro - Beware of integration / impairment risks! - ICICI Securities

Easy Trip Planners Ltd - IPO Review - ICICI Direct

ICICI Direct - Derivatives Weekly View (March 5): Level of 14700 remains crucial for upsides to continue...

Easy Trip Planners Ltd. - IPO - Strong Financials - Reliance Securities

Bharat Forge - Initiating Coverage - Constant evolution - HDFC Securities

Mahindra Logistics - Large-ticket deal win - ICICI Securities

Company Update - Huhtamaki India - ICICI Direct

Gladiator Stocks: IndusInd Bank, VIP Industries - ICICI Direct

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020