Moratorium is a welcome step, though it can have negative implications on the profitability of banks and stressed assets in the future. Long-term repo operation (LTRO) is a boost to the corporate bond market as the liquidity availed by the banks will be deployed in investment grade corporate bonds, commercial paper and non-convertible debentures. … [Read more...] about Market rallies on monetary & fiscal stimulus, but sustainability depends COVID-19 control
Notice that the key to higher Indian growth is lower crude oil prices. It reduces inflation, allows the central bank to have a looser monetary policy, brings down interest rates, takes the pressure off the current account deficit and strengthens the currency. The reason why the IMF has increased its GDP growth projection from 7.4% to 7.5% in 2019-20 is lower oil prices. … [Read more...] about Quick Take | Can the IMF predict oil prices?
In India, currently, everyone is talking about a rate cut, even if done, it will not be good enough. More importantly, we need supportive measures to provide confidence in the market for lenders & borrowers about the viability & sustainability of the banking system. We will need more liquidity to the system, credit to SME, refinancing and additional support to sectors that are heavily affected by the slowdown due to COVID-19. … [Read more...] about Market awaits relief package, but correction will continue if virus spreads further
The realisation that the world is not coming to an end seems to have dawned on the markets, with the Dow Industrials getting out of bear territory on March 26, just when we were thinking that markets had lost their faith in central banks. Indeed, US equities brushed aside Armageddon-like jobless claims, an indication that confidence is returning to the market. They also dismissed the steep falls in output indicated by the Flash Purchasing Managers Indices. Indeed, markets across the world are off their lows. But all that government and central bank policies can do is mitigate the impact of the lockdowns. That is very necessary, but any recovery in the economy will depend on how soon we can defeat the pandemic. And let’s not forget that we very likely have a bone-crushing recession ahead of us -- Moody’s has slashed its estimate of India’s GDP growth this calendar year to 2.5 percent. … [Read more...] about Moneycontrol Pro weekender: Bailouts ahoy