This AAA Fixed Deposit Fetches An Interest Rate Of 7.75%, Should You Invest?

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Interest rate on fixed deposits of Shriram Transport Finance

Tenure Quarterly Half yearly Yearly
12-months 6.35% 6.40% 6.50%
36-months 7.30% 7.37% 7.50%
48-months 7.39% 7.46% 7.60%
60-months 7.53% 7.60% 7.75%

Apart from the above mentioned rates senior citizens are entitled to an extra 0.25%, which takes the returns to almost 8% per annum. The company also has a cumulative fixed deposit option that it is offering.

Should you invest in the Shriram Transport Finance Fixed deposits?

Should you invest in the Shriram Transport Finance Fixed deposits?

Well, to begin with we wish to inform readers that fixed deposits are not secure deposits. We all know the battles and struggles the fixed deposit holders of DHFL faced or are presently facing to get their money back. Having said that we do not want to draw a comparison with Shriram Transport Finance, given that it is a completely different entity. All we are striving to tell our readers that company fixed deposits are not very secure deposits.

The problem for individuals especially those who are retired is that interest rates have fallen very low and that 1 to 2 per cent extra can also make a difference.

What we suggest to investors?

What we suggest to investors?

We want to tell readers that it is better to put small amounts and not large lumpsum amounts. Also, do not go for a very long tenure, given that interest rates globally are headed higher. This means that one can look for a 1 to 2 year deposits though on these tenures the interest rates are much lower.

One can also look for the Tamil Nadu Power Finance Corporation Fixed Deposits, where the interest rate is as high as 8%. The deposits are also safe as the company is a Government of Tamil Nadu owned entity.

There are many small finance banks, which might also give you around the 7% interest rate mark. Small finance banks are regulated by the RBI and the deposits are also insured. Hence, there is a greater element of safety that comes-by.

Interest rates in the next few quarters are unlikely to increase and hence investors will have to make do with what is given. However, in the more longer term of around 1 to 2 years, we expect interest rates to trend higher. This is largely because inflation will trend higher and with it the Reserve Bank of India would be forced to hike interest rates at well. It is therefore advisable to invest in fixed deposits for the shorter time period.

Disclaimer:

Disclaimer:

Investing in company fixed deposits poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.



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8 Stocks To Buy And Sell For Short-Term Gains

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Stocks to buy and sell

1) Dr. Ravi Singh, Head of Research & Vice President, ShareIndia

Bank of India: Buy the stock at Rs 56, Target on the stock Rs 65, Stop Loss, Rs 54

Cadila Health: Buy at Rs 556, Sell the stock at Rs 570, Stop Loss Rs 551

BHEL: Buy at Rs 65, Target Rs 72, Stop Loss Rs 63

2) Manoj Dalmia, Founder and Director, Proficient Equities Private Limited

Titagorh Wagon: Buy the stock at at Rs 107, Target Rs 122, Stop Loss Rs 1100.50

3) Sandeep Matta, Founder TradeIT Investment Advisor

Gujarat Gas: Buy at Rs 615, Target Rs 640- 665, Stop Loss Rs 590

Vedanta: Buy Rs 286, Target Rs 294-304, Stop Loss Rs 275

4) Ravi Singhal, Vice Chairman, GCL Securities Limited

Reliance: Buy at Rs 2523, Target Rs 2544, Stop Loss Rs 2513

Stocks to trade

Stocks to trade

5) Kapil Goenka, Founder at Eternity Financial Services

KPI Global Infrastructure: Buy at Rs 128, Target Rs 140, Stop Loss Rs 118

According to Dr. Joseph Thomas, Head of Research, Emkay Wealth Management, “The equity market was off the peaks it had ascended in the last couple of weeks, as the Fed gave more emphatic indications of a tapering of the bond buying program quite soon. Though the initial response from the markets was positive, the likelihood of the rates rising fast with a high retail inflation and higher growth numbers started getting etched in the minds of the market participants. The 10 Year bench mark yield moved up above the 1.50 % level and it looks set to move up further. The testimony by the Fed Chairman this week further scaffolded this belief in an impending change of policy.”

Disclaimer:

Disclaimer:

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.



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Monetary Policy Committee seen keeping rates unchanged with ‘accommodative stance’

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Amidst softening retail inflation, the Monetary Policy Committee is expected to keep key rates unchanged and maintain its accommodative stance to help sustain the growth momentum. Some experts believe that there could be steps announced to calibrate excess liquidity.

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, said: “Acuité believes, in line with market expectations, that Reserve Bank of India will continue with its accommodative monetary policy in October although it is likely that it may take some further steps to recalibrate the excess liquidity in the monetary system over the next one to two quarters.”

Economy bouncing back

While the high-frequency indicators for August and September reveal that economic activity is reaching its pre-pandemic levels and the risks of another wave of the Covid are gradually on a decline, the recovery momentum is still uneven, he said.

Retail inflation, as measured by the Consumer Price Index, eased to a four-month low of 5.3 per cent in August with moderation in food prices.

“We expect headline inflation for September to come in at a five-month low of 4.35 per cent,” said a Treasury Research report by HDFC Bank.

“…the RBI is likely to keep its stance accommodative and maintain surplus liquidity in the system. The RBI is likely to wait for growth impulses to get stronger and once domestic and global risks abate (third wave, global supply chain disruptions, Fed taper) before rolling back monetary accommodation,” it said, adding the RBI is likely to continue to manage the yield curve (through GSAP sterilised or Operation Twist).

The MPC, chaired by RBI Governor Shaktikanta Das, is set to meet between October 6 and 8 for the next bi-monthly review. The Reserve Bank had last cut the repo rate by 40 basis points in May 2020 but has since then maintained status quo on rates.

Upside risks to inflation

Economists at Standard Chartered Bank too said they expect the MPC to keep both reverse repo and repo rates unchanged at the October meeting and said it is likely to marginally trim its 2021-22 CPI forecast from 5.7 per cent towards 5.5-5.6 per cent, though upside risks to inflation have increased.

The Standard Chartered Bank report said it expects the MPC to signal reverse repo rate normalisation from December at the October meeting “…in the absence of growth shocks.” It expects the MPC to hike the reverse repo rate by 40 bps (to 3.75 per cent) at the December and February policy meetings.

“The trajectory of inflation is shifting down more favourably than anticipated. As pandemic scars heal and supply conditions are restored with productivity gains, a sustained easing of core inflation can be expected, which will reinforce the growth-supportive stance of monetary policy,” the RBI Bulletin of September had noted.

At the August policy meeting, MPC member JR Varma was the sole dissenter. While he agreed with the other five members on keeping the policy repo rate unchanged at 4 per cent, he disagreed on continuing with the accommodative stance. He had noted that the possibility that Covid-19 will haunt us (though with lower mortality) for three -five years can no longer be ruled out.

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Yields harden as liquidity concerns outweigh positive news

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Benchmark yields rose 5 basis points last week compared to the previous one pushed up by concerns on the liquidity front despite a slew of positive news.

The week commenced with the FY22 second-half borrowing calendar coming in at ₹5.03-lakh crore, which was well within the anticipated level. Then came the fiscal deficit number for April-August at 31 per cent of the Budget Estimate. The GST collections for September also came in at ₹1.17-lakh crore which is 23 per cent higher compared to the same month last fiscal.

However, yields continued to move higher as concerns on the liquidity front took precedence. For one, the cut-off on the seven-day variable rate reverse repo auction came in at 3.99 per cent last week. Compared to this, the cut-off on the 14-day variable rate reverse repo auction was at 3.6 per cent the week before.

This implies that the RBI is gradually getting comfortable paying a relatively higher rate in order to suck out the excessive liquidity sloshing around in the system.

Rate review

Bond market participants are wary that the central bank will raise the variable rate reverse repo (VRRR) auction quantum as well as the tenors and also raise the fixed reverse repo rate in the upcoming Monetary Policy.

Ananth Narayan, Professor-Finance at SPJIMR, said a lot has happened over the past few weeks that wasn’t conducive for the bond market. “Commodity prices have shot up, there have been energy shortages around the world, mainly China and the UK, and the whole confusion about the US debt ceiling also added pressure on the US treasury yields.

“As we worry about cost-push and imported inflation, the concern is whether the RBI might start reducing G-SAP and raising overnight rates next week. I believe the central bank would not want to shock the markets. They may increase the VRRR and suck out some of the excess liquidity, but would also comfort the market that the liquidity would remain on the surplus side for much longer. I think it would be a surprise if the benchmark yield goes beyond 6.30 per cent in the short term,” Narayan said.

The 10-year US treasury yield also went up to 1.56 per cent last week before cooling to 1.46 per cent. With the benchmark yield hitting 6.24 per cent, bond traders expect the yield to find solace close to the 6.3 per cent level. All eyes are now on the Monetary Policy where the crucial thing to watch out would be any potential changes in the VRRR quantum, tenor as well as the fixed reverse repo rate.

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French multinational bank Societe Generale proposes to utilize DeFi MakerDao stablecoins for $20 million loan, BFSI News, ET BFSI

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The third largest French multinational investment bank and financial services company, Societe Generale (SocGen), submitted a proposal MIP6 to the DeFi platform Makerdao’s governance forum for utilizing DAI stablecoins for refinancing the concept of bond tokens. The proposal of Societe Generale aims to get DeFi’s approval to accept on-chain bond tokens issued by the bank as collateral for a stablecoin DAI loan.

The French bank has applied for a $20 million loan in DAI stablecoins using bond tokens as collateral. This could be perhaps the biggest institutional adoption of DeFi. The French government recognizes both the on-chain bond tokens and DAI stablecoins. The MIP6 proposal further underlined the following points :

  • The refinancing transaction initiative combines traditional capital market activities with the thriving ecosystem.
  • The proposal would be a pilot project and aims to shape and promote an experiment under the French legal framework.

The Security Tokens Refinancing proposal was published on 1st October 2021 on behalf of French bank’s subsidiary, SocGen-Forge or SG-Forge that focuses on digital assets. The initiative is in sync with the SG-Forge’s earlier innovative process and solutions according to the Forge’s officials, as reported in Bitcoin.com. SocGen has been leading in experimenting with blockchain-based assets.The covered bonds also known as OFH bonds were issued by the bank as security tokens on the Ethereum blockchain in 2019 itself. The covered-bond tokens for which the bank has submitted proposals to Makerdao were issued in 2020 on Ethereum blockchain, at a fixed rate of 0 percent, having maturity in 2025. These bonds have AAA rating under Moody, leading American financial services provider, and Fitch, leading international credit rating agency. Covered bonds are derivative instruments like mortgage-backed or asset-backed securities. They are a package of loans that are first issued by banks and then resold to financial institutions.

For the latest crypto news and investment tips, follow our Cryptocurrency page and for live cryptocurrency price updates, click here.



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Why US debt ceiling debate is giving jitters to financial markets, BFSI News, ET BFSI

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The US economy is passing through a tricky phase. US Treasury Secretary Janet Yellen testified before the Senate Committee on Banking, Housing and Urban Affairs that the US government would run out of cash by October 18, 2021. She also laid down the disastrous impact on the US economy should the Congress fail to pass the bill to fund the government and raise the country’s debt ceiling limit.

Let’s try to understand the whole scenario. When the expenditure of the government exceeds its revenue, it borrows money to cover the difference. In the usual practice, governments borrow money by issuing treasury securities. To bring in fiscal responsibility, most of the countries put a limit on the amount of money that the government could borrow. Similarly, in the US, the debt ceiling was first enacted in 1917. And in 1939, an aggregate limit was placed on the government debt. The debt ceiling is thus a legal limit on the amount of money that the government can borrow. Currently, in the US, it is capped at around $28.5 trillion.

In the present scenario, if the government hit/not raise the debt ceiling limit, it could lead to a delay/default on its obligations. The US government would be forced to default on many of its obligations, including the social security payments. Though the US economy has been strongly recovering, the Covid Delta variant has slowed down the recovery progress. And the consumer confidence index has even hit a seventh month low in August.

A default in social security payments/salaries would negatively impact consumption expenditure, as the beneficiaries would cut down their spending or delay the payment for rent/utilities. In such a scenario, a default, or a threat of one can have a larger negative impact on the domestic economy.

More importantly, any default on the interest payment (which would be avoided) on the treasury securities could create a turmoil in the financial sector. Such a development could lead to a fall in the prices of treasury securities as there will be lesser demand for it. This, in turn, could push up yields, resulting in a higher borrowing cost across the economy. A higher borrowing cost could pull down the overall investment and consumption in the economy.

The ongoing debate on the debt ceiling limit along with the risk of a higher inflation has pushed the US 10-year treasury yield upwards, reaching 1.52 per cent (as of 30 September 2021). Even during 2011 and 2013, when the debate on the debt ceiling limit was happening, treasury yields had seen a similar spike.

The nervousness that is visible in stock markets across the globe could be partly explained by the current impasse. The popular phrase “When the US sneezes, world catches cold” still holds. Though the chance of a default by the US government is slim, a prolonged impasse can have serious implication on not just the US economy,but across the globe. And this occurring at a time when the global economy is recovering from one of the worst crises can indeed have painful implications.



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Market cap of eight of top 10 valued companies tumble over Rs 1.80 lakh crore, BFSI News, ET BFSI

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New Delhi: Eight of the top 10 valued companies together suffered an erosion of Rs 1,80,534.34 crore in their market valuation last week, with IT majors Tata Consultancy Services and Infosys emerging as the biggest laggards. From the top 10 list, only Reliance Industries Limited and State Bank of India emerged as gainers.

During the last week, the 30-share BSE benchmark plunged 1,282.89 points, or 2.13 per cent. Market benchmarks faced losses for the fourth straight session on Friday.

The market capitalisation (Mcap) of Tata Consultancy Services declined Rs 52,526.53 crore to reach Rs 13,79,487.23 crore.

The valuation of Infosys tumbled Rs 41,782.4 crore to Rs 7,06,249.77 crore. HDFC’s valuation tanked Rs 22,643.11 crore to Rs 4,90,430.74 crore and that of ICICI Bank plunged Rs 21,095.77 crore to Rs 4,79,985.13 crore.

The market capitalisation of Bajaj Finance eroded by Rs 16,438.9 crore to Rs 4,54,026.68 crore and that of HDFC Bank dipped Rs 10,410.41 crore to Rs 8,76,329.45 crore.

The valuation of Hindustan Unilever Limited declined by Rs 9,222.14 crore to Rs 6,34,977.04 crore and that of Kotak Mahindra Bank by Rs 6,415.08 crore to Rs 3,95,563.67 crore.

In contrast, Reliance Industries Limited added Rs 25,294.38 crore taking its valuation to Rs 15,99,346.41 crore.

The valuation of State Bank of India jumped Rs 9,773.33 crore to Rs 4,03,169.33 crore.

In the ranking of top 10 firms, Reliance Industries Limited remained the most valued company followed by Tata Consultancy Services, HDFC Bank, Infosys, Hindustan Unilever Limited, HDFC, ICICI Bank, Bajaj Finance, State Bank Of India and Kotak Mahindra Bank.



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5 best and worst performers, BFSI News, ET BFSI

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The crypto market has been correcting since the last few months and now all eyes are on what Bitcoin is going to do next. $40,000 was Bitcoin’s strongest local support, and last week we saw a positive move from $40,000 to $48,000.
Considering $50,000 as Bitcoin’s first local resistance, this move can be seen as a test move. Major resistance is not very far, and north of $52,000 is all it needs to break into a new trend.

This volatility in the market is good because it brings in some action; at the same time, support and resistance are tested multiple times.

Usually we see such behaviour towards the beginning of any big move. This is the time where short-term traders stay away and long time traders monitor the market closely for confirmation.

From a crypto market point of view, the current phase looks like a good consolidation period and hopefully, we’re coming to the end of consolidation.

As for the next movement, it’s going to be very difficult to say. It’s because when the stock market is also correcting from an all-time high and if there is a significant correction in the stock market, we could see that effect in the crypto market as well.

This would probably decide the next big move for Bitcoin and altcoins. However, it is time for traders to be patient. In the short-term, we could also see a few short positions being open.

However, from a risk-reward perspective, it does not seem to be a favourable time to trade. If you are a long-term investor, it’s definitely a good idea to dollar-cost-average your investments and keep buying the dip.

The month of October should be interesting for the market. Stay safe and play safe.

Crypto Cart: Five best performers
OMG Network (OMG)- 107% up
Axie Infinity (AXS)- 72.5% up
OKB (OKB)- 57.7% up
Qtum (QTUM- 53.8% up
ICON (ICX)- 49.9% up

Crypto Cart: Five worst performers
Constellation (DAG): 29.5% down
Celer Network (CELR): 17% down
Velas (VLX): 15.6% down
DigitalBits (XDB): 15.5% down
IoTex (IOTX): 7% down

(Source: coinmarketcap.com, data as of 13.30 hours, IST on October 02, 2021)
(Siddharth Menon is COO, WazirX. Views are his own)



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BSE ready with technology for launching electronic gold receipts, BFSI News, ET BFSI

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New Delhi: Leading stock exchange BSE is ready with its technology to introduce electronic gold receipts (EGRs) on its platform, which will help in creating uniform price structure of the yellow metal across the country, its chief business officer Sameer Patil said on Sunday. The exchange will take the required internal approvals and apply to markets regulator Sebi for the launch of the new class of security on its platform, he added.

This comes after the Sebi board on Tuesday cleared a proposal for gold exchange, wherein the yellow metal will be traded in the form of EGRs and will help in having a transparent domestic spot price discovery mechanism.

Currently, India allows trading only in gold derivatives and Gold ETFs, unlike several other countries which have spot exchanges for physical trade in gold.

The instruments representing gold will be called Electronic Gold Receipts (EGRs) and it will be notified as securities.

EGRs will have trading, clearing and settlement features akin to other securities that are currently available in India.

“BSE, which is well known for its technological prowess, has been the main proponent of creating a transparent and efficient spot market for gold as it is very important commodity for Indian consumers,” Patil told PTI.

He, further, said the exchange was preparing the technology for very long in this market and was awaiting for the in-principle approval for the same to take it further.

The exchange had made several presentations to government and regulators on how the process will work. How the participants of various types including banks, vaults, wholesaler, retailer, importers, exporters etc will participate in this ecosystem.

According to Patil, like shares, these EGRs will be held in demat form and can be converted into physical gold when needed.

To enable trading in physical gold, EGRs (backed by physical gold) will be traded and settled on stock exchanges.

Patil said that the entire trading will be done in three tranches that include conversion from physical gold to EGRs, trading of EGRs and again conversion of EGR back to physical gold.

To begin with, BSE may plan to launch EGR of 1 kg and 100 gm denominations and the same can be converted to physical gold. To attract retail investors, EGR with smaller denominations of 50 gm, 10 gm and 5 gm will also be launched in a phased manner.

The source of supply of the physical gold to be converted into EGR will be the fresh deposit of gold, coming into the vaults, either through imports or through stock exchanges accredited domestic refineries.

A client can also convert physical gold to EGR by depositing physical gold at the designated delivery centre. Exchanges will empanel Vault Service Providers (VSPs) based on guidelines prescribed by Sebi.

Similarly, clients can redeem EGR’s back to physical gold, and the process is complete. An interface will be developed between the vault managers (of physical gold), depositories (that hold EGRs in demat) and stock exchanges and clearing corporations that clear the trade.

The move is expected to reduce the existing market inefficiencies that exist in bullion trade and may act as a bridge in integrating spot gold trade with derivatives markets and create a transparent platform for bullion trading.

In addition, a single point trading for both spot and derivatives would provide scale, liquidity and better pricing for all market participants by bringing down cost and cycle time significantly.

Moreover, trading in EGRs will contribute to the existing programs for gold monetization such as Gold Monetization Scheme (GMS), Gold Bonds and Gold Deposits.

In union budget 2021-22, Finance Minister Nirmala Sitharaman announced setting of a gold spot exchange and Sebi will be the designated regulator for the proposed gold exchanges.



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