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11th April 2022
Good Morning! 

Happy Mondayyyy!! We have a nice short 3 day work week this week with Mahavir Jayanti and Good Friday. Don't you just love it when holidays line up like this, we know we do.
  MARKETS
 

SENSEX

59,447.18

+ 0.70%

NIFTY

17,784.30

+ 0.82%

US$

77.00

+ 0.55%

GOLD

52,034

- 0.13%

10-YR

7.12%

+ 20.6 bps

OIL

5,466

+ 0.76%

*As of market close

  • Markets: Stocks bounced back on Friday after 3 straight down days before that. But bonds sold off heavily after the results of the RBI policy meeting were announced. Keep scrolling for more deets on that. 

Monetary Policy

First RBI Meeting of FY'23
Good times can't last forever

The RBI's first policy meeting of this financial year led stock markets higher but bond traders clearly did not like what they heard.

Interest rates remain unchanged for now, with the repo rate at 4% and the reverse repo rate at 3.35% (for the 11th time in a row). And this was unanimously voted for by the Monetary Policy Committee (MPC).

Even the RBI's stance, which indicates how they might act going forward, remained "accommodative". But Governor Das did say that there will be a focus on withdrawal of accommodation to ensure inflation doesn't run out of control. And these are key words bond markets are paying particular attention to - "withdrawal of accommodation"

They cut growth projections for this fiscal year though, 7.2% from 7.8% earlier, and the inflation forecast was bumped up to 5.7% from 4.5%.

Naturally, the inflation numbers are subject to being revised based on geopolitical developments in Russia and Ukraine, as the price of crude oil is a key factor.

For controlling liquidity in the financial markets, the RBI introduced a new tool called the Standing Deposit Facility (SDF), and also adjusted the Liquidity Adjustment Facility (LAF) corridor to 50bps, the same as pre-Covid times.

The SDF and LAF are somewhat complex tools used but the RBI to manage the plumbing of our financial system. We won't go into detail here, but if you're interested, do check out this article by CNBCTV18 that explains stuff nicely.

The tone of the policy overall was perceived as hawkish by investors and fund managers, and the 10 year government bond yields jumped above the 7% mark for the first time in a long time.

The debt products CIO at Kotak AMC thinks that this policy was used to lay the base for tightening rates in the coming months and expects bond yields to rise going ahead. 

Tech

Tech Snippets
Money gun

Coinbase started accepting purchase orders for tokens listed on its platform from India last week. There was quite a lot of fanfare about its launch here. Their founder and CEO Brian Armstrong has also been here in India over the past week adding even more hype.
They'd started accepting only UPI as a payment method here and now it turns out after a grand total of 4 days they've run into some issues here.
Users from here who tried purchasing tokens were just told that the UPI payment method is "currently available" and that they should use another payment method. The irony though is that UPI was the only payment method they had.
The weird thing though is there may be some issues with UPI's governing body – NPCI causing this. After Coinbase launched here they put out a cryptic statement saying they aren't aware of any crypto exchanges using the UPI payment option here.
We won't be surprised if Coinbase has run into some classic 'sarkari' issues. We hope not though.

Regulation needed

Speaking of sarkari, the RBI is going to be looking into complaints against digital lenders here. They even hope to take some action soon enough.
They've been quite a few customers that have been complaining on social media about how they found BNPL loans issued in their name without their consent. This was affecting their credit scores.

We joke about how now you can just think of a loan and get one in most cases but there are quite a few customers who don't understand the risks.
Digital lending is expected to go up to $350 billion by next year, so we do hope we see some more regulation soon. Don't want any more bad debts issues.

Dunzo Daily

Dunzo has launched its own quick commerce stores in Bengaluru, Chennai, Pune and now Mumbai.
Dunzo is quite bullish about delivering fresh fruit to consumers in no time at all.
If you all are confused about what's new about Dunzo delivering stuff like groceries/fruits, earlier they'd aggregate stores and deliver from there. Now they've started their quick commerce model where they have their own dark stores and will be delivering from there. Dunzo Daily aims to bring down delivery timings while having oversight of its own inventory in real-time.

On a Lighter Note

Campus Ambassador Program

If you are a college student do check out our campus ambassador program. 
For more deets follow this link.

If you have more time ...

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