MPC minutes

There seems to be unanimity over monetary dovishness…

What is unique about the recently constituted Monetary Policy Committee (MPC) is that the detailed minutes of the MPC will be made public exactly 14 days after the policy announcement. This is a great step towards transparency. The minutes do not just capture the gist of the discussions, but also presents the views of each of the 6 MPC members with their arguments and their monetary stance. This gives a clear and more lucid idea of how the monetary tone is shifting within the MPC. In the first MPC meet, there was total unanimity on the need to cut repo rates by 25 bps. Continue reading

Essar Rosneft Deal

Finally, deleveraging is catching on and that is good for banks…

The recent $10.5 billion acquisition of Essar Oil by a consortium led by Rosneft of Russia is significant is many ways. The deal of course values the company at $6 billion and also takes over the company’s debt worth $4.5 billion. To skirt the sanctions imposed by the US on Rosneft, the deal is being structured via a consortium wherein Rosneft will hold 49% while commodities trader Trafigura will hold around 45% with a third partner. This structure will ensure that Essar Oil does not get subjected to the US sanctions. Continue reading

Reliance Q2

Impressive, but concerns over the Jio overhang continues…

Reliance announced its results on 20th October and the results were largely in line with expectations. While the net profits were marginally up on sequential basis, it was sharply up compared to the corresponding quarter last year. The big disappointment was on the Gross Refining Margins (GRM) front which came down from $11.5/bbl in the last quarter to $10.1/bbl. However, this figure is still substantially higher than the benchmark Singapore GRM. Here are the key takeaways from RIL’s Q2… Continue reading

Breaking up the MPC debate and why it is important…

The minutes of the first Monetary Policy Committee (MPC) are both insightful and instructive. It not only gives an insight into the thinking of the 6 members of the MPC but also can throw up interesting trends on the thinking of the individual members. The government and the RBI need to be lauded for the concept of an MPC which will bring in a lot more transparency in the way the entire monetary debate has taken place in India. Here is a member-wise account of the debate ahead of the rate cut decision this month. Continue reading

MF New Fund Offerings (NFO) are back in the market…

According to a recent report, there are nearly 35 new fund offerings (NFOs) lined up from various mutual fund houses. For starters, an NFO is the equivalent of an IPO. While companies raise money through an IPO, a mutual fund raises fresh money through an NFO. But the question is that a mutual fund is always available on tap and one can go and buy any fund from the AMC at any point of time. So what is the idea behind a mutual fund NFO? Basically, mutual funds use an NFO to launch a new idea or a new scheme altogether. The NFO helps them to create the market visibility and excitement to ensure that it is fully subscribed. Interestingly, the last time we saw such a large number of NFOs was at the peak of the previous bull market in 2007. Post 2009, mutual funds in India were seeing redemptions continuously till 2014. It is only after mid-2014 that the tide changed and Indian mutual funds again started getting inflows. The question therefore is what should investors do in the midst of this barrage of NFOs? Continue reading

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