The Signal (weekly highlights)

1. RBI shows Intolerance to high yields by devolving 10 year G sec auction

The Reserve Bank of India (RBI) partially devolved the 10-year G-sec auction on 13 April 2022 following which the yield on the 10-year benchmark cooled off slightly.

The apex bank had notified to raise Rs.130 billion against issuance of 10-year G-sec. Investors placed bids worth Rs.316.3 billion, but the RBI accepted bids for only Rs.114.3 billion with a cut-off yield at 7.24 per cent.

2. Economists expect interest rate hike cycle to begin in June

With retail inflation touching nearly seven per cent in March 2022, economists expect the repo rate hike cycle to begin in June.

The monetary policy committee (MPC) decided to hold the repo rate at four per cent in its April meeting while maintaining that the stance will remain accommodative with a focus on the withdrawal of accommodation. Most economists expect interest rates might go up by 50-200 basis points (bps) in the current fiscal.

3. Centre surpasses asset monetization target for 2021-2022

Under the National Monetisation Pipeline (NMP), the government completed transactions worth Rs.960 billion in 2021-22, surpassing the target of Rs.880 billion, according to a government official.

The official further added that aggregate asset monetisation target for 2022-23 has been firmed up at Rs.1.62 trillion. The NMP, launched in August 2021, estimates aggregate monetisation potential of Rs.6 trillion through core assets of the central government, over a four-year period, from 2021-22 to 2024- 25.

4. Corporate credit growth to move to higher trajectory

Despite the geopolitical tension, banks are likely to see a better fiscal ahead on the back of a turn in the interest rate cycle, growing business confidence and domestic demand.

Credit growth in the corporate sector is expected to double from 2021-22 levels driven by the project pipeline in the infrastructure sector, uptick in private sector capital expenditure, especially through the PLI scheme, and increased working capital requirement, according to rating agency Crisil.

5. Specialty steel PLI scheme gets response from secondary players

On July 22 last year, the Union Cabinet chaired by Prime Minister Narendra Modi had approved the Rs 6,322-crore PLI scheme to boost the production of speciality steel in India.

Production Linked Incentive (PLI) scheme for speciality steel has received a total of 27 registrations and three applications ahead of the 30 April deadline. The sector is witnessing a good response and all of them are secondary players