Goodwill Investor Education Initiative:
GoodWill Eagle’s Eyes!
We have witnessed one of the best performing weeks in the recent past thanks to the Corona Virus vaccine, FM’s Budget amply reflected in the Share Markets, rewarding the Investors handful. The MPC policies of RBI have also supplemented the initiatives of the Union Govt. Of course, all is not good…The rising prices of Petrol and diesel, the upward movement of essential goods and gas cylinders, the evolving High Inflationary trends, the lavish freebies, Agricultural Loans write-off by State Government on the eve of impending State assembly elections, the unrest amongst the Farmers and the like do not add value to the economy as a whole and prove to be areas of concern for Economists, planners and policymakers per se. So in our view, the coming weeks may witness a small correction in Markets with the large investors preferring to book the profits in uncertain times of this kind.
Let us have a glance at the important features of the RBI’s policies.
– Key policy rates remain unchanged
– Repo rate unchanged at 4%
– Accommodative stance to continue for now
– Reverse repo rate unchanged at 3.35%
– 10.5% GDP growth outlook for 2021-2022
– RBI projects CPI inflation at 5.2% In Q4 FY21
– Funds from banks via the TLTRO scheme now available to NBFCs
– Restoration of CRR in two phases beginning March 21
– RBI shall issue guidelines on outsourcing for digital payment system
– RBI to form an expert panel to strengthen primary urban co-op banks
RBI Policy quote by Rajeev Radhakrishnan, CIO-Fixed Income, SBI Mutual Fund.
“Maintaining status quo on rates and stance was the expected outcome of the Policy Review. However, the lack of specific market intervention measures to ensure smooth absorption of the enhanced market borrowings remains the key disappointment from the fixed income market perspective. Providing retail investors a direct avenue to invest in Government securities is a welcome announcement from a longer-term perspective.
While the promise of additional liquidity infusion post the unwinding of the CRR cut in 2 phases by Q1 FY22 holds the promise of OMO interventions, the immediate market action is a fair reflection of market absorption capacity. In the absence of direct and more specific upfront market intervention through OMO/Twist, the near term concerns remain of a gradual uptick in bond yields and continued uncertainty on the demand side as the borrowing program commences for FY22.”
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