Nifty 17857.25 (-1.94%)
Sensex 59984.7 (-1.89%)
Nifty Bank 39508.95 (-3.34%)
Nifty IT 34913.6 (-1.66%)
Nifty Financial Services 18987.55 (-2.65%)
Adani Ports 688.10 (-7.74%)
Asian Paints 3116.30 (0.70%)
Axis Bank 758.35 (-3.70%)
B P C L 420.80 (-1.61%)
Bajaj Auto 3700.70 (-2.01%)
Bajaj Finance 7484.25 (0.03%)
Bajaj Finserv 17987.70 (-0.13%)
Bharti Airtel 689.75 (-1.79%)
Britannia Inds. 3681.90 (-0.43%)
Cipla 891.75 (-3.33%)
Coal India 166.55 (-4.06%)
Divis Lab. 5121.15 (-0.55%)
Dr Reddys Labs 4569.95 (-1.99%)
Eicher Motors 2527.50 (-2.18%)
Grasim Inds 1702.40 (-1.50%)
H D F C 2900.80 (-0.49%)
HCL Technologies 1152.00 (-2.14%)
HDFC Bank 1593.60 (-2.99%)
HDFC Life Insur. 683.10 (-1.55%)
Hero Motocorp 2667.75 (-0.83%)
Hind. Unilever 2389.65 (-0.29%)
Hindalco Inds. 468.80 (-2.30%)
I O C L 128.65 (-1.64%)
ICICI Bank 798.70 (-4.35%)
IndusInd Bank 1176.00 (2.93%)
Infosys 1703.90 (-1.45%)
ITC 225.10 (-5.60%)
JSW Steel 667.45 (-2.55%)
Kotak Mah. Bank 2098.50 (-4.10%)
Larsen & Toubro 1814.25 (1.66%)
M & M 883.85 (-0.33%)
Maruti Suzuki 7369.70 (0.18%)
Nestle India 18991.40 (-0.07%)
NTPC 137.35 (-2.80%)
O N G C 150.20 (-4.88%)
Power Grid Corpn 185.90 (-2.29%)
Reliance Industr 2598.60 (-1.10%)
SBI Life Insuran 1167.10 (-1.59%)
Shree Cement 28193.05 (0.30%)
St Bk of India 501.35 (-3.43%)
Sun Pharma.Inds. 807.60 (-2.12%)
Tata Consumer 809.70 (-1.11%)
Tata Motors 481.05 (-3.38%)
Tata Steel 1299.60 (-2.00%)
TCS 3421.65 (-1.95%)
Tech Mahindra 1533.30 (-2.20%)
Titan Company 2375.15 (-3.45%)
UltraTech Cem. 7446.65 (1.26%)
UPL 729.90 (-1.56%)
Wipro 656.90 (-2.12%)

Red Herring Prospectus (RHP): A Hand Book for IPO Investing

Red Herring Prospectus
IPO
by Nikita Bhoota 05/05/2021

Initial Public Offerings (IPOs) create a lot of buzz among investors. The recent IPOs such as Kalyan Jewellers, Nazara Technologies, are great examples. But when so many companies announce IPOs regularly, it can be tough to identify the right company to invest in. Therefore, reading the company’s Red Herring Prospectus (RHP) is a great way to identify whether it has good potential or not.

Now first let’s understand what is RHP?

A Red Herring Prospectus, or offer document, is filed by a company to SEBI (Securities and Exchange Board of India) when it plans to raise money from the public by selling shares of the company to investors. The document is very useful to investors because it provides detailed information about the company’s business operations, financials, promoters and the company’s objective for raising funds by filing an IPOs. It also explains how the company aims to use the money that will be raised, the possible risks for investors etc.

Also Read: List of Upcoming IPOs

Where Can You Find an RHP?

You can find an RHP at any of the following places:
The official website of SEBI. You need to go through the “Offer Document” section to find it. 
Websites of Stock Exchanges and select Merchant Bankers 

Additionally, the issuing company has to make a public announcement through at least one newspaper after submitting the RHP to SEBI. It can be a Hindi, English, or Regional language newspaper.

As an investor, here are a few things to look at in a Red Herring Prospectus:
 

  • Details of the Offer

This section offers the details about the IPO including the number of shares offered via fresh issue and offer for sale. It also offers a break-up of the QIB, Non-Institutional, and Retail portions.

  • Capital Structure

This section offers details about the Equity Share Capital of the issuing company as of the date of the Red Herring Prospectus. This includes the authorized share capital and issued, subscribed, and paid-up capital before the offer. It also has information about the history of the equity share capital held by the promoters of the company.

  • Objects of the Offer

This section offers details about how the company plans to utilize the funds collected via the IPO. As an investor, this can be used to evaluate if the company is focusing on growth or will use the raised funds to repay debt, to meet working capital requirements or any other goal.

  • Industry overview:

A red herring prospectus carries information about the position of the company, in comparison to its competitors. The performance trends of the industry to which the company belongs is also included in the document. If you are planning to invest in a particular company’s IPO, you should analyse the various business and economic variables at play, the demand and supply mechanism and the future prospects.

  • Business Description:

This segment talks about a company’s core operations and how it conducts business. As a potential shareholder, you should pay attention to this part as your investment will be utilised by the company in its core business.

  • Financial information:

This is one of the most important segments and contains the company’s audit reports and financial statements. As an investor, the financial statement will help you get an idea about the company’s financial performance in the past. It will also help to get an idea of future dividends based on the profits disclosed. You can project the safety and profitability of your future investment based on the financial statement.

  • Strengths

The Red Herring Prospectus also lists the strengths of the company – both internal and external. These strengths distinguish the company from its competitors. It is essential to go through this section only after understanding the company’s business and its competition. The strengths of the company can help you understand the potential it has to grow in the near future.

  • Strategies

This section lists the strategies adopted by the company to establish and grow its business. This can include product-level strategies, geographic strategies, market-level strategies, etc. This can help you know the approach taken by the issuing company to generate profits.

  • Risk Factors:

Companies lists out the potential risks that could impact their business and operations under a section titled ‘Risk Factors’. While many are routinely listed risks, some risks need to be examined. For example, if you find that the company has several pending legal cases, it may be a good idea to avoid the IPO. As an investor, you should be able to read between the lines to identify the real risks that could pose a threat to the company’s growth in the future.

  • Management:

This section has details such as names, qualifications, designations about directors, promoters and key management personnel. It may also have information about any criminal cases or that of financial delinquency or pending litigations against these people. It is important to check this section because all these can be a risk factor.

  • Promoters and Promoter Group

You can find complete details about the promoters and/or promoter group of the company in this section.

  • Dividend Policy

It is not compulsory for a company to declare dividends. However, some companies have a formal dividend policy that is declared in this section. You can also look at the dividend declared by the company on equity shares in the previous financial years if applicable.

Conclusion:
The RHP has a lot of information about the company. If an investor goes through the entire RHP carefully, evaluating its fundamental strength can be easy. Spend some time analysing the information before investing in an IPO.

See more about RHP in this video:

About 5paisa:- 5paisa is an online discount stock broker that is a member of NSE, BSE, MCX and MCX-SX. Since its inception in 2016, 5paisa has always promoted the idea of self-investment and has ensured that 100% operations are executed digitally with minimal to no human interventions. 

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Is Fertiliser Sector in Danger Zone?

Fertilizer sector
by Nikita Bhoota 11/05/2021

India’s fertiliser industry has announced sharp price increases in non-urea fertilisers in recent weeks, on the back of soaring input costs. However, the government’s directive to the industry to roll back the price increase creates some uncertainty. Besides, even if the industry eventually succeeds in implementing price hikes, farmer demand for non-urea fertilisers seems likely to take a serious knock, consistent with past experiences of 2013- 14 and the mid-1990s. Given these uncertainties, we remain cautious on the non-urea segment.

Industry announces sharp price increases:
While several companies announced price increases w.e.f. 1-Mar, IFFCO – which held out for a month – announced an even sharper increase w.e.f. 1-Apr. IFFCO’s new MRP for DAP – Rs1,900/bag – seems driven by the ~50% jump in international prices of DAP in recent months.

Caught between margins and volumes.:
While the industry has understandably opted to protect margins by raising prices, past experience highlights the risk of a consequent decline in non-urea sales volumes, especially as urea prices will remain fixed. Meanwhile, the government’s intervention in the matter by asking the industry to not raise prices adds another layer of uncertainty. The industry faces an unpleasant choice between margins and volumes.

International prices have sharply risen over the past six months

US$/ Tonne

Oct-20

Nov-20

Dec-20

Jan-21

Feb-21

Mar-21

Latest

DAP

360

365

364

380

492

537

560

Ammonia

270

270

270

272

280

377

430

Urea

268

266

271

300

370

367

350

Sulphur

60

60

60

73

77

77

155

Phosphoric acid

689

689

689

689

780

795

795

Rock phosphate

79

80

83

83

85

88

795

Potassium chloride

203

203

203

203

203

203

203

Source: Media Reports

The above table shows that while the price of DAP has sharply risen in recent months, the price of its key input phosphoric acid has lagged behind thus far. Consequently, the spread between DAP and its inputs has sharply widened in the past couple of months, at least based on currently quoted prices. Consequently, producers of phosphoric acid (primarily based in Morocco) are likely to negotiate hard for a sharp price increase for 1QFY22.
In the face of the relentless increase in international prices in recent months, the Indian government has thus far refused to increase subsidy rates for non-urea fertilisers. Consequently, increasing market prices (MRPs) is the only way out for the Indian fertiliser industry.

Yet, following IFFCO’s announcement of price raises, the government intervened by directing the industry to not raise prices. It is unclear whether this directive applies only until the Kharif season begins. Minister of State for Chemicals and Fertilisers Mansukh Mandaviya said that “the Government of India had called a high-level meeting and directed fertiliser companies not to increase the price of DAP, MoP and NPK, and fertiliser companies agreed with it,"

If the industry is forced to sell at old rates even after Kharif sales gather pace, its profit margins will be severely impacted, unless the government raises subsidy rates. If the government eventually permits price increases, we expect a significant decline in sales of non-urea fertilisers. Past experience from the FY13-14 and FY1993-94 periods indicate that sharp increases in fertiliser prices tend to lead to sharp compression in sales volumes. This is particularly so, given that urea prices will remain fixed, further exacerbating the price imbalance between the urea and non-urea segments.

Stock Performance:
Nifty50 has rallied 78.4% from April 01, 2020-  May 06, 2021) Here, we have discussed Fertilizer sector stocks that have surpassed Nifty50 index performance or have given positive returns in the same period. 
 

Company

01-04-2020

06-05-2021

Gain/ Loss

Chambal Fertilisers & Chemicals Ltd.

106.0

221.9

109.3%

Coromandel International Ltd.

534.8

729.9

36.5%

Fertilisers & Chemicals Travancore Ltd.

30.2

121.9

304.3%

Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

112.4

374.2

233.0%

Gujarat State Fertilizers & Chemicals Ltd.

36.6

100.6

175.1%

National Fertilizers Ltd.

18.5

62.6

239.3%

Rashtriya Chemicals & Fertilizers Ltd.

27.2

79.6

192.5%

Mangalore Chemicals & Fertilizers Ltd.

22.9

89.9

292.6%

Southern Petrochemical Industries  Corporation Ltd.

11.1

36.0

225.8%

Source: Ace Equity

Fertilizers stocks have given skyrocketing returns in the past one year. Fertilisers & Chemicals Travancore Ltd. rallied the most 304% from April 01,2020-  May 06, 2021 followed by Mangalore Chemicals & Fertilizers Ltd. 293%, National Fertilizers Ltd. 239%, Gujarat Narmada Valley Fertilizers & Chemicals Ltd. 233%, Rashtriya Chemicals & Fertilizers Ltd. 192%. Coromandel International Ltd. jumped the list 36% in the same period.

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

Next Article

5 Major Market Stories to keep an eye on - May 2021

Stock market stories May 2021
by Nikita Bhoota 12/05/2021

We have witnessed lot of volatility in Indian stock markets in April 2021. Surge in Covid-19 cases, declaration of state lockdown, concern over vaccine availability and quarterly results were some of the major reasons that have affected market performance and investor sentiments.

After the uncertainty of Apr-2021, here are 5 major stock market stories to keep an eye on in May 2021
 

  • COVID19 Cases

Increasing COVID cases are a concern with over 400,000 cases per day. If lockdowns get extended, markets will be disappointed and likely to witness a downward trend. The major challenge is to expand vaccinations, control the spread of COVID and minimize the economic impact.

  • Quarterly Results:

SEBI has given time till end of Jun-2021 to declare quarterly and annual results. Only ~20% of the BSE-500 companies have declared Mar-2021 results and numbers have been better yoy however, below the Dec-2020 quarter as per the market reports. May will see the results trajectory being established.

  • Foreign portfolio investors (FPI) Action:

Foreign portfolio investors withdrew Rs 12,039 crore from Indian equities in April after infusing nearly $37 billion in FY21. May will decide whether this FPI outflow was a temporary action or an act due to something serious with the economy.

  • Fiscal Stimulus:

Will there be another fiscal stimulus by the government? There are expectations that government may announce a smaller stimulus in May-2021 to reduce the pain, apart from throwing some helicopter money. Rate cuts are likely to be ruled out for now. Experts have demanded a fresh stimulus package aimed at boosting the economy and putting cash in people’s hands, especially the marginalised, as the second wave of the novel coronavirus disease (COVID-19) pandemic continues to rip through India.

  • Inflation Data:

Lastly, the big story in May will be inflation. The lockdown would have deteriorated supply chains and it is likely that inflation spiking once again in May. It would be a concern if it crosses the RBI comfort zone of 6%. In India, consumer price index (CPI) inflation stood at 5.52% in March compared to 5.03% in February and 4.06% in January. The rise in CPI inflation was driven by a surge in fuel and transportation costs along with an increase in some components of the food basket. Moreover, the record Covid-19 surge across the country now, especially at a time when advanced economies have already started recovering, could put serious upward pressure on inflation.

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5 Stocks to BUY during Coronavirus (COVID 19) pandemic

5 Stocks to buy during COVID-19
by Nikita Bhoota 20/05/2021

The Indian economy has performed relatively better than expected in 2HFY2021. The efforts taken by the GoI in the FY22 Budget marked the clear path for driving growth whilst compromising on fiscal prudence in order to drag the economy out of the Covid led slide. However, the current Covid second wave has re-imposed fresh partial lockdowns, limiting the economic activities.  As some economic & health indicators are already pointing towards downward revision in the GDP forecast, investing in the covid resilient sectors would be an ideal strategy to tide the second wave of Covid. We believe, sectors like Healthcare, Pharma, Diagnostic & selected FMCG will continue to thrive during the FY22.

Recommended Stocks CMP (Rs) Target (Rs) Upside
JB Chemicals & Pharmaceuticals (JBCP) 1,372 1,680 22.40%
Thyrocare Tech 1,027 1,250 21.70%
Cipla 904.00 1,050.00 16.20%
Dabur 538 620 15.20%
Apollo Hospitals 3,230 3,550 9.90%

Source: 5paisa Research, * price as on 19th May ,2021.

Investment Rationale:
Cipla:
Cipla is one of the largest Indian pharma companies. It is a major player in the domestic formulations market, which contributes ~39% of its total revenue. Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes, weight control, depression and many other health conditions. We are positive on the stock due to strong build-out expected in the US business led by the inhalation portfolio, where we believe respiratory products alone can add incremental sales of USD230-250mn (40-45%) to the US business by FY25E and drive 12% cc Cagr (18% incl. Revlimid) in US sales over FY21-23E.  Sustained traction in chronic therapies will drive 7.5% Cagr in India sales over FY21-23E, despite the higher base.  We believe US respiratory launches, synergies from the One-India strategy and further cost optimization would drive a sustainable increase in return ratios over the medium term. The stock trades at 24.3x FY23E EPS.

JB Chemicals & Pharmaceuticals (JBCP) 
JBCP is a 40-year old pharma company with several well established brands in the domestic market and wide geographical presence in the both regulated and semi-regulated markets. While JBCP has created strong brands in the cardiac & gastro segments in India, focus ahead will be to diversify into diabetes, nephrology, paediatrics and respiratory. Expansion into these therapies will not entail an additional sales force, as mgmt. is re-aligning the GTM strategy for its rep team, by combining existing divisions. JBCP also intends leveraging its relationships with 0.3m doctors, to drive penetration in new therapies. Mgmt. is targeting 12-14% growth in its India PCPM over medium term, driven by 6-8 annual launches & increasing contribution from chronic therapies. Incremental R&D investments and BD opportunities will help JBCP augment its product portfolio and drive better growth in its branded generics businesses. Two new product launches are also planned in Russia in FY22, while JBCP intends to ramp-up its US ANDA filings to 4-6 from 1-2 pa, going forward. Although JBCP will look to complement its organic growth through acquisitions, management stated that 50% of the incremental capital allocation will be dedicated to the India business, where it will look to acquire brands/mid-size companies and, possibly, enter into inlicensing deals with MNC companies for the cardio-diabetes.

Apollo Hospitals
Apollo Hospitals is an integrated healthcare provider, with services ranging from hospitals, retail pharmacies, health insurance, clinics etc. The company is a pioneer in corporate hospitals and forms the largest hospital chain & organized retail pharmacy chain in India. Apollo’s overall hospital occupancies improved to 63% in 3Q from 56% in 2Q. While non-Covid occupancy stood at 60% in 3Q, it was already at 67% in Dec-20. Mgmt. indicated that occupancies should reach pre-Covid levels of 68-70% by 1Q/2QFY22, led by pick-up in international patients, domestic travel and improving surgical volumes. Healthcare services margins improved QoQ, from 11.5% to 18.5%, led by higher ARPOB and increase in surgical volumes. Mgmt. targets expanding margins for mature hospitals to 23-24% (current 20- 21%) and for new hospitals to 15% (current 13-14%) over the next 12-18 months, led by international patients and high-end surgeries. Kolkata hospital expected to contribute Rs800-850mn Ebitda in FY22ii (vs. nil in FY21). Pharmacy margins are also expected to improve, to 7% in FY22E from 6.5% in 3Q. Of the Rs11.7bn QIP proceeds, Rs4.1bn will be utilized for acquisition of 50% stake in Kolkata hospital and Rs1.5bn each for Apollo 24/7 and the diagnostics business Apollo aims to achieve preventive healthcare revenue of Rs10bn in the next 3 years, from Rs2.5bn currently. It also aims to scale diagnostics revenues to Rs5bn from Rs1.6bnpa, by deepening presence in South/East market.

Dabur:
Dabur India is one of the largest FMCG companies in India, with interest in health care, personal care and food products. Building on its legacy of quality and experience of over 100 years, Dabur has a number of powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Real, etc. The company primarily operates in four segments i.e. consumer care, international business, foods and retail. Its international business spans across Southeast Asia, MENA and USA, and contributes around 30% to its total revenue. Covid tailwinds resulted in acceleration in the healthcare portfolio, the momentum has sustained at a high level for the third consecutive quarter in categories such as honey, chyawanprash, OTC and ethicals. Growth is likely to settle at a lower, but robust level in this portfolio. Dabur is ticking the right boxes in terms of riding the healthcare momentum and has accordingly stepped up ad-spends intensity. Recovery in hair care, juices and international has further sweetened the performance. The management highlighted that input cost inflation has inched up to 5- 6% in categories such as honey, amla, herbs and spices and the company would look to pass it on to consumers. Also, management indicated that ad-spend intensity would remain high to support brand investments and new launches. Dabur aspires to increase its ad-spends as a percentage of sales to ~11.5-12%, similar to HUL.

Thyrocare Tech:
Thyrocare is the largest B2B diagnostics player in India primarily serving smaller standalone labs, hospitals, nursing homes and doctors. Thyrocare operates a Centralised Processing Laboratory (CPL) at Navi Mumbai, which is supported by 11 Regional Processing Laboratories (RPLs). B2B segment accounts 80-85% of Thyrocare’s pathology revenue, while Thyrocare has also created a strong brand for itself through ‘Aarogyam’ test profiles in the wellness segment.  Thyrocare’s strong B2B model and industry leadership in wellness testing allows it to process high volumes of routine tests which, along with lower sample acquisition costs, drive significant operational efficiencies and 40% margins for Thyrocare. While its revenue growth had slowed during FY17- 20, mgmt. is striving to drive improved accessibility for the brand by doubling company’s network of branded collection centers to ~1,000 TSPs by the end of CY21. While network expansion will contribute significantly to company’s growth from FY23E, it will also help Thyrocare to expand its customer base, improve TAT and further optimize logistics costs. Thyrocare trades at 30-50% discount to its B2C peers owing to higher pricing pressures in B2B/wellness segment, Thyrocare’s unparalleled focus on operating efficiencies enables it to offset such pricing impact.  We expect 12% revenue Cagr for Thyrocare over FY21-23E.

We are glad to announce that our recommended Portfolio has performed well wherein almost all the stocks in the portfolio have achieved the desired targets and have given strong returns throughout the last year. Check our performance of COVID-19 portfolio that was suggested in 2020

Wondering how to start trading in stocks? Visit our Stock Trading section to learn more.

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Yayyyy!!! Nifty Hits Record High, Why?

nifty hits all time high
by Nikita Bhoota 28/05/2021

The bulls have won the race and have taken charge of Indian markets, pushing the Nifty50 to record highs on May 28 even as the market cap of BSE-listed companies has gone past $3 trillion for the first time.

The Nifty touched a record high of 15,469.65 on May 28 and has rallied more than 10 percent in 2021. The rise in market has been led by gains in Sun Pharma, Divi’s Laboratories, SBI Life, IOC, Asian Paints, Wipro, Tata Steel, and JSW Steel, which are up 10-60% since February 16 when the index hit the previous high of 15,431.

Here, we have discussed 5 factors that supported the market performance:

Fall in Covid19 cases:

The Union government on Thursday said that India is now seeing a stabilisation of the second wave of the pandemic as the active cases and the test positivity rate is witnessing a declining trend after peaking in early May. India recorded 186,364 new covid19 in the last 24 hours’ taking the country’s total to 2,755,5457 cases according to union health ministry data on Friday. This is the lowest daily covid19 number since April 14, as infections continue to decrease in the country.

Rapid Recovery in Vaccination:

According to the health ministry statement, a total of 20,04,94,991 vaccine doses have been administered, as per the provisional report till morning of 25th May 2021. As per the media reports, the supply of Covid-19 vaccines is likely to increase gradually from June, helping India get close to 300 crore doses in the seven-months period ending December.

GST Council Meet:

The GST Council is likely to discuss on Friday a reduction in the tax rate on Covid medicines, vaccines and medical equipment as well as means to make up for the shortfall in revenues promised to states. Thus, this may have improved investors sentiments.

Healthy Quarterly Results:

Most of the Indian corporates usually registered growth or improved top-line or bottom-line numbers in the March quarter of the year 2021 despite Covid19 challenges. Improving consumer sentiments, easing lockdown restrictions, favorable Government policies, fall in Covid19 cases and rapid vaccination process supported the financial performance of the companies.

 

US Job Data:

The procession of Americans heading to the unemployment line fell last week, with jobless claims totaling a fresh pandemic-era low of 444,000, the Labour Department reported Thursday. Economist surveyed by Dow Jones had been expecting 452,000 new claims as the jobs picture improves thanks to an accelerated economic reopening across the country. The total represented a decline from the previous week’s 478,000.

Stock Performance Nifty 500

Nifty 500 Top Gainers
Source: Ace Equity

5 stocks in the Nifty 500 list have given more than 100% returns between the period February 16,2021- May 27, 2021, more than 38 stocks have given more than 50% return. Recently, the market cap of BSE-listed companies surpassed the $3 trillion- mark, making the Indian market the eighth largest in the world.

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

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Highlights of RBI Monetary Policy and Market Performance

RBI Monetary Policy
by Nikita Bhoota 04/06/2021

The Reserve Bank of India (RBI) governor Shaktikanta Das addressed a press conference today and this was the second bi-monthly Monetary Policy Committee (MPC) meeting for this fiscal year. Governor Shaktikanta Das announced the MPC's decision after it concludes its three-day meet on June 4, 2021.

Highlights of RBI press conference:

  1. RBI MPC Keeps Rates Unchanged

RBI MPC keeps repo rate unchanged at 4%, reverse repo rate at 3.35%.  This is the sixth time in a row that RBI has kept the benchmark rates unchanged. Experts also earlier anticipated that RBI is likely to keep the policy rates unchanged and maintain accommodative stance amid the growing uncertainty over COVID-19 pandemic.

Repo Rate

Source: Media Reports, RBI

  1. MPC to Continue with Accommodative Stance:

The RBI's Monetary Policy Committee (MPC) has decided to continue with accommodative stance until necessary to mitigate impact of COVID-19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25%.

  1. FY22 GDP Forecast Reduced to 9.5%:

RBI MPC reduced FY22 GDP forecast to 9.5% from earlier estimate of 10.5%. The Q1FY22 GDP forecast has been slashed to 18.5% from earlier estimate of 26.2%.

  1. RBI Forecast Normal Monsoon:

According to Governor, forecast of normal monsoon and resilience of agriculture and farm economy will provide tailwinds to growth revival.

  1. Operation Under G-SAP 1.0 Will Conducted on June 17:

Primarily, the G-SAP move is aimed at supporting the bond markets which also results in softening of corporate bond yields. The Reserve Bank of India (RBI) Governor Shaktikanta Das announced that another round of Government Securities Acquisition Program (G-SAP 1.0) worth Rs 40,000 crore will be conducted on June 17. Additionally, G-SAP 2.0 of Rs 1.2 lakh crore will be conducted in Q2 FY22. Of the additional round under G-SAP 1.0, Rs 10,000 crore would constitute purchase of state development loans (SDLs).

  1. CPI Inflation:

RBI says, CPI inflation is projected at 5.1% in FY22. 5.2% in Q1; 5.4% in Q2; 4.7% in Q3; and 5.3% in Q4 with risks broadly balanced.

  1. FOREX:

India’s foreign exchange reserves touches $600 billion. Formal announcement in due course. Later today, we will see it at $598 billion, RBI Governor.

  1. Big measures for MSMEs

Special liquidity facility of Rs 16,000 crore for MSMEs via SIDBI For 1-year at repo rate

Exposure Threshold Under Resolution Framework 2.0 Increased to Rs 50 crore from 25 crore for MSMEs

  1. On-tap Liquidity Window for Contact-intensive sectors:

The Reserve Bank of India (RBI) on Friday announced creating a special liquidity window of Rs 15,000 crore with a tenor of 3 years at the repo rate to provide liquidity support to the contact-intensive sectors hit by Covid-19.

 The special liquidity window encourages banks to provide fresh lending support to hotels, restaurants, tourism, aviation ancillary services, and other services including private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours/saloons.

Market Performance:

Nifty 50  index dropped 64 points today

Below is the performance of Sectoral Indices

Indices

% Change

Nifty Bank

- 1.00

Nifty Auto

+ 0.83

Nifty Fin Service

- 0.22

Nifty FMCG

- 0.36

Nifty IT

+ 0.03

Nifty Media

+ 1.02

Nifty Metal

+ 1.35

Nifty Pharma

- 0.09

Nifty Psu Bank

- 0.16

Nifty Pvt Bank

- 0.81

Nifty Realty

+ 0.48

Source: NSE

Watch this video on RBI Policy

Disclaimer: The above report is compiled from information available on the public platforms.