OASIS FUNDAMENTALS - WEEKLY UPDATE

PARTING GIFT FROM DR. RAJAN

Bond markets got a booster shoot from RBI with slew of measures announced on 25^th August 2016. Accepting Khan Committee Report recommendations, RBI has announced various measures ranging from enhancing aggregate limit of partial credit enhancement (PCE) provided by banks, permit brokers in corporate bond repos, authorize platform for repo in corporate bonds and encouraging credit supply for large borrowers through market mechanism. The central bank will also seek amendments in the RBI Act to accept corporate bonds under Liquidity adjustment Facility (LAF). In addition to this, banks would be permitted to issue Masala Bonds i.e Rupee bonds overseas for their capital requirements and for financing infrastructure and affordable housing. The RBI has also announced that Foreign Portfolio Investors (FPIs) would be given direct access to NDS-OM and trade directly in corporate bonds.

For forex markets, Reserve Bank has now permitted entities both resident/non-resident to hedge transactions upto a limit of USD 30 million at any given time. The entity would be free to access any market, OTC or any other exchange and use any of the permissible products at its discretion In addition to this limit, AD banks based on their assessment of the customer, may allow an open position limit of upto USD 5 million. 

JANET &  JACKSON HOLE

US Fed has signaled that the US economy is on a strong footing with respect to labor market though inflation is still under 2%. Incase August jobs report next Friday is positive, likelihood of September hike cannot be ruled out. But December rate hike is higher possibility with US elections in November. 

INFOSYS SYNDROME

Infosys touched its 52 week low during the week and closed at Rs. 1020.75 on Friday. The Bengaluru based company clarified that it would give more accurate information on its revenue guidance after the second quarter FY17. The company is reeling under Brexit effects among its clients. The Royal Bank of Scotland has cancelled its contract with the company post Brexit.