Analysts are expecting that due to the sudden surge in COVID-19 cases, the Monetary Policy Committee of the RBI would most likely hold repo rates at 4% and reverse repo rates at 3.35%. The MPC meeting will begin on 05 March and culminate in the monetary policy announcement on 07 March. The inflation rate has also stayed within the RBI comfort level of 6% outer limit. Also, with recent IIP and core sector numbers being rather disappointing, the MPC may hold rates and an accommodative stance may also stay.
PSU banks are expected to take a hit of Rs.2,000 crore due to the recent Supreme Court ruling on waiver of compound interest on all loan accounts which had opted for a moratorium during the COVID period. The original waiver was only for loans up to Rs.2 crore and now the Supreme Court has ruled that even loans above Rs.2 crore should be exempt. However, this time around the government will not foot the bill, so PSU banks may end up taking a hit of Rs.2000 crore. Moratorium was meant to ease liquidity burden.
A total of 8 out of the 10 most valuable companies on the NSE by market cap added Rs.128,503 crore last week. Once again, it was IT majors like TCS and Infosys which led the rally ahead on optimism ahead of their quarterly results. While TCS added Rs.36,158 crore, Infosys added Rs.20,877 crore during the week. Among others HUL added Rs.19,843 crore, Reliance Rs.17,402 crore, SBI Rs.12,004 crore and ICICI Bank Rs.10,682 crore. The HDFC twins jointly gave up value to the tune of Rs.3320 crore in a truncated week.
IL&FS got Rs.693 crore as settlement claims for 2 road projects from the NHAI, taking the NHAI’s total claim settlement with IL&FS to Rs.1804 crore. These 2 projects referred to settlement amounts on the Kiratpur Ner Chowk Expressway and the Chennai Nashri Tunnelway. Apart from these two, other IL&FS projects settled under claims and compensation by NHAI include Jorabat Shillong Expressway, Baleshwar Kharagpur Expressway and the ITNL Road project. Khed Sinnar Expressway settlement is pending.
It has been officially confirmed that the Suez Canal has finally been cleared almost a week after the stranded “Ever Given” was dredged and tugged away. All 422 ships stranded had fully passed through the canal by Saturday with 61 ships passing through on the last day. Suez Canal remains a major connecting artery for trade between the Middle East and Europe. While the canal has been cleared, the lag effect of the stranded ship is likely to impact global supply chains over the next few months.
Reliance Industries and BP of UK have invited bids for sale of 5.5 million standard cubic meters per day of additional natural gas from the eastern offshore KG-D6 block. The e-auction is expected to commence on 23 April and gas supply would start by early May. The lowest bid that can be placed is JKM minus $0.3 per million British thermal unit. JKM is the Japan Korea Marker. The highest acceptable bid will be JKM plus $2.01 per MMBtu. This is the very same benchmark used by RIL and BP in February this year.
There may be some solace as mutual funds invested Rs.2,476 crore into equities in March, marking the first infusion in 10 months. But, this could be largely attributed to year-end buying to protect NAVs for the fiscal year. Since June 2020, mutual funds had been net sellers in the equity markets each month, even as FPIs were aggressively buying Indian stocks. Experts also aver that many fund managers were worried about the resurgence of COVID in India and its repercussions on economic growth and markets.
OPEC and allied countries have agreed to gradually increase supply by 2 million bpd starting from May under pressure from the US. OPEC will add back 350,000 bpd in May, 350,000 in June and another 400,000 bpd in July. Saudi Arabia will also restore additional 1 million bpd in cuts that it made voluntarily. It can be a Catch-22 for OPEC. Raising production in advance could push prices lower, but oil dependent OPEC countries cannot hold down output for too long. Brent has been hovering around $65/bbl.