Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Monetary Policy June 2022 - Axis MF Views

Posted On: 2022-06-08 22:55:41 (Time Zone: IST)


The RBI's statement today, was largely a non-event for the market since the market has priced in a large portion of rate hikes. Volatility in the bond markets that were seen in the last few months have been on account of the RBI recognizing headwinds that the markets perceived well ahead of time.

By projecting inflation at 5.8% by March 2023, the target to have policy rate above the rate of inflation implies a terminal repo rate in this hiking cycle of 6% or more. Market pricing for the terminal repo rate (as evidenced by the steep yield curve and OIS rates) already was above 6%.

Incrementally the evolution of actual inflation and liquidity management will drive market trajectory.

Since the start of the year, long-term yields have already risen by over 100 bps. Short-term yields have risen by 150+ bps. For investors, the sharp rise in yields means that markets have already priced in the worst of the rate movements. We believe the markets have priced overnight rates rising to 6%+ over the medium term. With current repo rates at 4.90% this implies 100+ bps of incremental rate hikes factored into bond yields.

The current G-Sec yield curve post 4 years is trading flat with a 4X10 year spread materially below long term averages. Similar trends are visible in the corporate and SDL curve. We had been playing for the curve flattening theme since January across our active portfolios and were using a barbell strategy to build portfolios within stated investment mandates without taking direct exposure to the 1-4-year segment. Now as the theme has played out, we have been recalibrated our portfolios.

The stance changes on liquidity and the fast tracking of neutralizing liquidity is likely to have an impact on corporate spreads especially AAA V/s G-Sec. In the interim period, as spreads widen, investors would be better suited to favour strategies with a G-Sec & SDL bias.

The current yield curve presents material opportunities for investors in the 4-7-year segment. This category also offers significant margin of safety given the steepness of the curve. For investors with medium term investment horizon (3 Years+), incremental allocations to duration may offer significant risk reward opportunities. For investors with short term investment horizons (6 months - 2 years) floating rate strategies continue to remain attractive as interest rate resets and premiums offer competitive 'carry' and low volatility. Credits can also be considered as ideal 'carry' solutions in the current environment.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

CRISIL Ratings: Domestic demand, softer cotton prices to sustain RMG growth

CRISIL Ratings: Higher workplace occupancy to light up cigarette volume 7-9%

CRISIL Ratings: Apparel retailers to grow 7-8% this fiscal via expansion, festival spur

CRISIL Ratings: For tea companies, ~8% revenue degrowth brewing this fiscal

CRISIL Ratings: Revenue of paper makers to crumple 8-10% this fiscal

ICRA expects banking sector to stay resilient, outlook remains Positive

CRISIL MI&A: Red-hot domestic demand to stave off steel price melt this fiscal

CRISIL Ratings: Replacement demand to drive tyre volume up 6-8% this fiscal

CRISIL Ratings: Home textiles makers to weave revenue, profitability rebound this fiscal

Capital outlay on roads, renewables seen rising ~35% in this and next fiscals to Rs ~13 lakh cr, backed by strong execution pace

Softening demand to moderate Indian IT services industry growth to 3-5% in FY2024: ICRA

CRISIL Ratings: Telcos may dial up Ebitda 15-17% to Rs 1.2 lakh crore this fiscal

CRISIL Ratings: Social welfare spend of states to hit a decadal high this fiscal

CRISIL Ratings: Footwear sector revenue to tread ~11% higher this fiscal

CRISIL Ratings: Robust demand to whip up dairy industry revenue 14-16%

Indian hospital industry's operating profit margin will remain healthy at over 22% in FY2024: ICRA

Weak overseas demand to snip 5-6% off jute revenue this fiscal - CRISIL

ICRA expects the telecom services industry to report moderate revenue growth of around 7-9% in FY2024 amid high capex spends

CRISIL - Viscose staple yarn makers set for 10-12% revenue growth this fiscal

Sugar mills seen unscathed despite pricier cane, lower exports - CRISIL

CRISIL Ratings: Specialty chemicals on domestic drive, revenue seen growing 6-7%

CRISIL Ratings: Higher ad spends to lift revenue 13-15% for print media this fiscal

Paytm: Top brokerages, such as ICICI Securities, Axis, Dolat lift Paytm's target price to Rs. 1250

CRISIL Ratings: Securitisation volume surges 60% to first-quarter peak

CRISIL Ratings: FMCG sector to witness 7-9% rise in revenue this fiscal

CRISIL MI&A and ATMA: Tyre industry on a roll, driving towards doubling in size

CRISIL Ratings: Slowing US, EU to chip 6-8% away from handicraft sales this fiscal

CRISIL MI&A: One out of five MSMEs to see stretch in working capital days

Yes Securities Identifies Rural India as Key Driver of Economic Recovery in Latest Report

CRISIL Ratings: Revenue of automotive component makers to grow 10-12% this fiscal

CRISIL: Residential real estate sales to grow 8-10% this fiscal

CRISIL MI&A: Cement prices to dip 1-3% this fiscal despite healthy demand

CRISIL Ratings: Aircraft MRO services revenue could leap 3x in 5 fiscals

Demand pressures to moderate revenue growth of Indian fashion retail entities to 10% in FY2024: ICRA

CRISIL Ratings: Revenue of organised gold jewellers to rise 16-18% this fiscal

CRISIL Ratings: Revenue of top 18 states to grow at 6-8% this fiscal

Automobile Sector - Monthly Quick View - May'23 - Steady YoY and MoM Growth on Low Base; UVs are Clear Winner...

CRISIL Ratings: New guidelines lend much-needed clarity to FLDG usage

MSP for kharif crops - Views of Pushan Sharma, Director - Research, CRISIL Market Intelligence and Analytics

PMI Services logs a record high, Employment scenario, however, remains a concern

Road construction to witness 16-21% jump in FY2024, ahead of General Elections: ICRA

Sustained demand momentum to drive double-digit revenue growth for the Indian hotel industry in FY2024: ICRA

HCL Technologies Ltd - Q4FY23 Result First Cut - A marginal miss on major parameters, though PAT beats expectations

Indian quick-service restaurant industry to witness strong growth in near to medium term with expected ramp-up in store additions: ICRA

HDFC Securities Institutional Research Desk: Report on Infosys - On the back foot

Infosys Ltd. Q4FY23 Result First Cut - A miss on all fronts

Healthy credit growth of NBFCs and HFCs led to highest post-pandemic quarterly securitisation volumes in Q4 FY23, estimated at ~Rs 61,000 crore: ICRA

Impact of Monsoon forecast on Markets - Reliance Securities

HDFC Securities Institutional Research Desk: Report on Kolte Patil Developers - Premiumisation to drive the next leg of growth

Operating margin of domestic base metal entities to remain range-bound at 19-20% in FY2024: ICRA


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020