Author: Emkay User

Rates & Policy Stance Unchanged The RBI policy announcement has left the repo rate unchanged at 4%, and it has decided to continue with the accommodative stance of the policy as long as it is needed. This is quite in line with what market participants expected from the RBI. The potential for inflationary pressures has […]

India enters a technical recession with two consecutive quarters of economic growth contraction. The GDP contracted by 7.50% in Q2FY21, as against the 23.90% contraction seen in Q1. It is pertinent to note that the rate of GDP growth is at an 11-year low, as compared to 4.20% in 2019-20, and an expansion of 6.10% […]

The CPI-based inflation maintained its upward momentum and surged further ahead; headline CPI inflation was reported at 7.61% for the month of Oct’20 as compared to 7.27% for the preceding month and 4.62% during the year ago period. The inflation numbers remained above the 7% mark for the second consecutive month. The elevated levels of […]

The IIP numbers reported expansion in industrial activity after witnessing contraction for six consecutive months. The IIP growth for the month of Sep’20 was reported at 0.2% as compared to -7.4% in the preceding month and 57.3% in the month of Apr’20. The growth number was healthy not only on a sequential basis but also […]

The CPI based inflation surged further and was reported at 7.34% for the month of Sep’20 as compared to 6.69% for the preceding month and 3.99% during the year ago period. The inflation numbers have remained sticky above the 6% level and breached the 7% mark for the third time in CY2020. The elevated levels […]

The IIP number remains in contractionary zone but continued its path to gradual recovery. The IIP contraction for the month of Aug’20 was reported at 8% as compared to 10.8% in the preceding month and 57.3% in the month of Apr’20. The pace of recovery has lost some steam, and this was largely expected as […]

The response of the markets to the Fed statement is no surprise. An extended period of low interest rates means three things, one, the current economic conditions are extremely distressful, two, the time taken for recovery is likely to be longer than expected, and three, an extended period of low growth. If a long-drawn struggle […]

The CPI based inflation was reported at 6.69% for the month of Aug’20 as compared to 6.73% for the preceding month and 3.28% during the year ago period. The inflation numbers have remained sticky at around 6% levels for the year 2020. The elevated levels of food inflation during the year been the major factor […]

The IIP numbers continued to remain in contractionary zone and extended the streak to five months. The rate of contraction is not as severe as seen during the months of April and May (months with strict nationwide lockdown), but the pace of recovery has lost some steam. The localised lockdowns and restrictions have led to […]

Registering a sharp contraction in economic growth, the GDP number for Q1 of 20-21, has come at -23.90%, a deep fall, the worst ever, which is the direct consequence of the pandemic and the lockdown. A fall close to -20 % was more or less expected by a number of market participants. Even with some […]

The availability of data improved in the month of July, as the data was available from 95% and 92% of the urban and rural centres respectively from the earmarked centres. The quality of numbers has thus improved and may find due consideration from the policy makers. The headline CPI based inflation was reported at 6.93% […]

The uncertain trajectory: Three months back as we had gone into the shutdown it was very clear that the trajectory of both growth and inflation would be uncertain. This has found expression in the statements from the RBI too on more than one occasion. This uncertainty is due to two factors, one, that due to […]

The nationwide lockdown situation led to a contraction in IIP’s year-on-year growth numbers for the third consecutive month. After Apr’20, the lockdown continued in the month of May’20 as well. As such, it was expected that IIP numbers may continue to contract. The partial relaxation of lockdown measures led to easing in the pace of […]

The month of Apr’20 was in the eye of the pandemic storm and witnessed nationwide lockdown without any relaxations. As such, it was expected that IIP numbers may contract sharply. The assessment of the level of contraction varied across market participants. Many of the correspondents contributing to the IIP data reported “Nil” production for the […]

Given the lockdown conditions across the country, the headline CPI-based inflation numbers were not released for the month of May as well. The price data collection exercise has been in suspension since 19th Mar’20. The inflation data for only such commodities or services sub-groups was declared for which adequate trade data was available. Even as […]

The IIP growth witnessed a sharp contraction of 16.7% for the month of March 2020, as compared to 4.6% in the preceding month and 2.7% recorded during the year ago period. While street estimates expected a contraction in IIP growth, the actual numbers were worse than expectations. The corona virus pandemic affected the production facilities, […]

The National Statistics Office (NSO) in its CPI press release, provided index numbers for select sub-groups whereas headline inflation numbers were not declared owing to nationwide lockdown hindering the process of data collection. The data collection activities have been suspended with effect from 19th Mar’20. The inflation data for only such commodities or services sub-groups […]

Arbitrage Funds, Now? Most often the short-term investment landscape is dominated by overnight funds, liquid funds, and ultra-short tern funds. In the recent past due to volatility in the short-term rates some of these schemes except overnight funds have given occasionally negative returns. While such volatility may be a very short-lived phenomena, quite often the […]

Further to the note titled, “Bond Funds: In the Light of Robust Processes”, from Bhavesh Sanghvi, CEO, Emkay Wealth, on the real issues, immediately after the FT Event, we are pleased to share this brief note on the consequences of this event for the near future. A Crisis of Liquidity? There is a liquidity glut […]

It will be an understatement to say that oil prices have been volatile over the last two months. The prices have been broadly in between the US$ 40 and US$ 20 levels. The fundamental factors that have been at play for the oil economy has been the slowdown or sluggishness in the economies like China […]

The RBI released a statement today wherein it provided its assessment of the current state of the economy and some additional measures to tide over the current situation. The announcements made today are part of the Governor’s statement and not an outcome of MPC meet. Assessment of the Economy: As per the RBI’s assessment, in […]

Macro Variables – Are they relevant now? The major macro variables that we look at to gauge the direction of the economy and the markets are GDP, IIP, CPI etc. But these variables may remain not very relevant in the immediate future as they may not be assessed or estimated properly due to lack of […]

Update & Perspectives The four major factors that are of consequence for the fixed income or bond market are the policy of the central bank or the official interest rate policy, the liquidity conditions in the interbank market, the government borrowing program and the inflation trajectory. Each factor is detailed in the following paragraphs, along […]

The CPI based inflation numbers eased for the second consecutive month; after touching a high of 7.59% in the month of Jan’20, the headline inflation number for the month of Mar’20 came in at 5.91%. The core inflation numbers too maintained an easing trend. The latest inflation numbers are an estimation, as data collection efforts […]

The government borrowing program for the first half of 2020-21 has been announced. It is interesting to look at three features of the borrowing program from an investment perspective, that is the (i) spread of the borrowing program over H1 and H2, (ii) the maturity-wise concentration of the primary issues, and (iii) the month-wise distribution […]

In the Union Budget for 20-21, several measures were proposed to enhance the breadth and depth of the markets which included greater access for overseas investors, introduction of ETFs, and access to infrastructure investments with a tax holiday. The RBI has announced enhanced limits for foreign investments in governments securities and corporate bonds, and also […]

The RBI had been cognizant of the economic conditions and cut policy rates during the course of 2019, but it maintained a slow and steady approach. Over the last few months, the RBI’s headroom for direct support to growth was restricted owing to spike in inflation numbers, resulting in the central bank focusing rather on […]

There are some useful social welfare announcements from the Finance Minister this afternoon, focused on taking care of people who may be affected by the lockdown consequent to the pandemic. These measures should be understood in the correct perspective. These are not economic stimulus measures, but social welfare measures aimed at preserving the sustenance of […]

In the last few weeks, we have witnessed unprecedented volatility across asset classes, resulting from the sharp sell-off amidst flight to safety, generated by the fears around the economic impact of the pandemic. Under normal circumstances, the risk-off sentiment leads to money flowing into avenues traditionally considered as safe haven, such as debt. But in […]

THE FED ACTION The Fed has brought down the base rate to a range of 0% to 0.25%, bringing it back to the levels earlier seen during the recession of 2006-07. This coupled with the earlier cut of 0.50% is one of the deepest cuts the Fed has gone-in for in the recent history. The […]