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Suyash Choudhary

The February RBI policy was pleasantly noteworthy in that it seemed to strike a somewhat less hawkish than expected tone on CPI and, by implications, on policy rates. In particular, the RBI Governor vigorously defended the continuation of a neutral policy stance, emphasizing that CPI ex HRA is still close to  4.5%. Furthermore, most of the upside risk factors to CPI noted in the policy itself were largely supply side. Whereas, there were two demand side mitigants mentioned with respect to inflation: subdued capacity utilization and moderate real rural wage growth.

 

We use a series of charts below to depict some of these points. Source for all data is CEIC. We have equal weighted each sub-class to arrive at the aggregate wage data.

 

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The chart above makes 2 points: One, nominal rural wages have struggled to grow for the longest time and growth rates have in fact started to dip since mid of last year. Two, the simultaneous rise in inflation over this period, has further collapsed real rural wages. The de-acceleration in growth rate is sharper for rural agri wages as compared with rural non-agri wages as the graphs below show.

 
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It is instructive to look at the rural wage data over a longer period of time as well. This is to contrast just what the extent of fall has been. This is done below. However, there is a ‘data break’ here between November 2013 and December 2014 which is also seen below as a ‘missing piece’ in the chart.

 

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Turning to CPI, it is indeed quite helpful to look at various cuts of the headline CPI index. Thus traditionally, one has looked at core CPI that strips out food and fuel (including from the ‘transport and communication’ sub index). The objective behind doing this is to figure out what the ‘steady state’ impulses on CPI are. These give a better sense of what CPI is likely to be in the medium term. A similar objective is achieved by some by stripping out the top and bottom most volatile items in CPI. We have carried forward this method in the analysis below. Thus if one were to look at the CPI basket today, there are 3 items that are causing extra-ordinarily pressures (upward or downward) and are unlikely to last: 1> HRA: This is an optical effect for the most part and is soon to fade out over the past year. Since, it is difficult to exactly strip out only HRA one can more generally exclude ‘housing’. 2> Vegetables: Prices of some key vegetables have remained high over winter months and are only now coming off (vegetable index was still rising at the rate of 27% y-o-y in the January CPI print). 3> Pulses: Pulses prices have collapsed owing to overproduction due to false price signals previously. This is likely to correct in the time ahead (pulses index was falling at the rate of 20% y-o-y in the January CPI print). Thus in order to get a truer picture of CPI, one should strip out these 3 components; all of which are likely to mean revert over a period of time. This stripped out index is still almost 82% of the overall CPI index, thereby lending comfort that we aren’t losing a lot of information by stripping out a large part of CPI.
 
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As the graph above shows, this stripped out index is only very modestly up from its all time lows hit in the middle of last year. This is unlike the headline index that had collapsed dramatically, and is now up substantially from that low. Not just this, this stripped out CPI is only at 4.1% (very close to the RBI target) and has actually fallen over the past couple of readings.

 

Conclusion
 
The charts above reiterate the point that it is as yet premature to start building in imminent meaningful rate hikes. The RBI seemed to be sending a similar message via its latest monetary policy. The data here also lends some context to the attempts being made now to enhance rural incomes. While the route taken of MSP hikes may be debatable, there is no question that wages need to go up. It is also clear that there is adequate room here for wages to rise before demand led inflation starts becoming a genuine concern for the RBI / MPC.
 
Disclaimer:
 
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
 
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the stocks may or may not continue to form part of the scheme’s portfolio in future. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

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Suyash Choudhary

The RBI policy came amidst considerably uncertainty with participants, given the underlying global macro backdrop as well as the recent sharp rise in local bond yields. Some quarters were expecting a shift in stance while some were even assigning probabilities for an actual rate hike. As it turned out, the policy turned out to be much more run of the mill. Thus not only was there no rate action but the stance was also kept neutral.

 

We summarize below our key takeaways both from the policy document as well as from RBI’s media interaction subsequently:

 
1. The December policy had pegged CPI in the range of 4.3 – 4.7% for H2 FY 2018. The actual outturn for Q3 has been 4.6%. Q4 has been pegged higher now at 5.1%. This upturn is largely owing to less than expected moderation in food prices over winter as well as due to the recent rise in fuel prices. For FY 19,  CPI is estimated to be in the range of 5.1 – 5.6% for H1, and then moderate to 4.5 – 4.6% in H2; with risks to the upside. Most factors affecting this are again supply side including oil, higher industrial raw material prices, monsoons, state  HRA implementation, and the hike in customs duty in Budget. The demand side risks are from second round implication from state HRA implementation, possibly better ability for firms to pass on higher input prices owing to rise in economic activity, and linkages from fiscal deficit. However, there are two important demand side factors mentioned as mitigants : subdued capacity utilization and still moderate rural real wage growth. Importantly, from the supply side, even though the proposed higher MSP is mentioned as a risk there is also acknowledgement that the impact on inflation cannot be fully assessed at this stage. This point was repeated in the post policy media call as well and is in line with our own thought on the issue, as expressed in our post Budget note.
 
2. On growth, there is only a marginal downward revision for current year’s GVA to 6.6%. For next year GVA is pegged at 7.2% (7.3 – 7.4% H1, 7.1 – 7.2% H2) with risks evenly balanced. The growth enablers looked forward to include stabilizing GST effect, early signs of investment revival as reflected in resource mobilization picking up and improving capital good demand, the resolution of PSU bank asset issues including recapitalization, and anticipated export pick up. On the downside, the drag from oil is a factor.
 

Apart from the above, the concluding statement from the MPC seems noteworthy:  “The Committee is of the view that the nascent recovery needs to be carefully nurtured and growth put on a sustainably higher path through conducive and stable macro-financial management”.  Finally, the voting by MPC members had a hawkish leaning with the traditional dove, Dholakia, opting to join the status quo bandwagon. Whereas, Patra reverted to the disposition he is the most comfortable with and voted for a hike.

 

In the media call, Governor Patel ascribed the recent sharp rise in bond yields to non-RBI factors entirely; including higher US rates, oil prices, cyclical pick- up in demand in the economy as well as fiscal slippages from the government. Whereas, Deputy Governor Acharya took pains to reiterate that OMOs are done for liquidity management for the most part; although he didn’t seem to rule out exceptional circumstances. This shows lesser sympathy with what is happening in bond markets than what participants may have hoped for. On the other hand, the Governor was quite balanced with respect to the rate stance and defended the decision to keep the stance neutral. The reasons he gave included the fact that ex of HRA CPI is still close to 4.5%, impact from proposed MSP hikes is still not known, and that it may not be necessary for the government to necessarily hit 3% on deficit targets so long as the stance of fiscal policy was conducive to inflation management.

 

Implications

 

Our view has been, explained via multiple communications before, that the bar for a rate hike is high currently. We are comfortable reiterating this view post the February policy. The RBI / MPC assessment is quite continuous from the negative output gap that they had assessed in the December policy. Thus recovery is still judged to be nascent and most factors posing upside risks to CPI are largely supply side. If one needs to start ascribing timing for a rate hike (as opposed to actually expecting it as a base case), it is most likely to be not before August. By then the RBI / MPC will have much more information on both some of the supply side drivers of CPI (oil, MSP, monsoons ) as well as be able to assess how enduring and persistent the current cyclical growth upturn is likely to be, in the context of closure of the current negative output gap.

 

For a RBI / MPC that is still some distance from actively contemplating its first rate hike, there is surely excess fear pricing in the bond market. This makes front end rates (upto 5 – 6 years) a buy and hold trade from a core portfolio standpoint. Longer duration may also tactically make sense at least till meaningful new bond supply hits in April; given oversold markets and with one imminent fear with respect to RBI out of the way. However, one can only take a longer term call on long duration once the current impasse with respect to bond appetite from large local banks is resolved.

 

Disclaimer:
 
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
 
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the stocks may or may not continue to form part of the scheme’s portfolio in future. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

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Anoop Bhaskar

Snippets of Budget 2018

By: Punam Sharma

While the budget is an annual exercise of the government’s finances, a holistic way to analyse the budget is to look at the path chosen by the government over its entire term – if it has been consistent with its promises. In this context, NDA’s governments 4th budget has been consistent in its approach with the overall fiscal math appearing to be adhering to its stated objective of fiscal consolidation over the medium term.
 

While the overall allocation towards capex has increased by a modest 3.7%, it is the longer term trend that needs focus with overall capex spends from FY2014-2019 increasing by 73%. This growth is much higher than the 51% growth from FY2009-FY2014.
 

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On the subsidy side, the three key subsidies have been virtually flat growing at a total of just 8% over FY2014-2019. However, food subsidy has increased at a whopping 84% but this has been compensated by a 71% fall in oil subsidy over the same period. This compares to a doubling of subsidies by the previous government between FY2009 to FY2014.

 
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The prudence shown by the current government on controlling subsidies and using the resultant savings towards increasing capex outlay has resulted in a modest 24% increase in absolute Fiscal Deficit from FY2014-2019, as compared to a 49% jump from FY2009-2014. At the same time, India’s nominal GDP has grown 68% from FY2014-2019, thereby resulting in lowering of Fiscal Deficit as a % of GDP from 4.5% in FY2014 to 3.3% in FY2019. While there has been a minor slippage in FY2018, the FM has also adopted recommendations of the new Fiscal Responsibility and Budget Management Act with a commitment to reach 3% by FY2021, thus maintain the glide path.

 
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Tax collections have been buoyant, with Corporate, Income and Indirect taxes increasing 57%, 122% and 124% respectively from FY2014-2019. Taxes as a % of GDP have seen a continuous increase from 10.1%in FY2014 to 12.1% in FY2019.

 
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To summarize
 
Over FY2014 – FY2019, the government has done a reasonable balancing act by boosting capex through both budgetary as well as non-budgetary sources while curbing the growth in subsidies and improving tax collections.
 
As compared to other pre-election budgets, the government hasn’t gone the whole hog in terms of spending – 2008-09 budget increased by 20.8%, 2013-14 budget increased by 13.8% whereas the proposed budget expenditure increased by 10.8% which is lower than the nominal GDP growth estimate. Hence, the budget cannot be viewed as inflationary/expansionary in this context.
 
With respect to taxation, the reintroductions of long term capital gains can result in a period of uncertainty as investors adjust to the new regime after enjoying 12 years of tax-free returns. Going forward, this reintroduces an element of uncertainty in every budget with a built in volatility which was absent earlier. However, flows into any asset class should be driven by its attractiveness of potential returns, rather than the tax treatment.
 
We feel that the economic cycle is showing signs of an upturn with improvement in earnings growth expected. Going forward, improving earnings aided by global cyclical upturn would be a bigger trigger for markets than the short-term uncertainty over the LTCG and budget.
 
Key Takeaways from the budget
 
FY 18 Revised budget front loads Revenue expenditure at the cost of capital expenditure
 
1. FY 18 Revenue Expenditure is pegged at Rs 19.4 lakh crore, a growth of 15% YoY. Capital expenditure is pegged at Rs 2.73 lakh crore, de-growth of 4% over FY 17. Revenue expenditure has been bumped up 6% from the budget estimate, whereas Capital expenditure has been bumped down 12% from the budget estimate.
 
2. Off-budget expenditure (through PSUs and other non-budgetary sources) has seen a 41% increase from Rs. 3.38 lakh crore to Rs. 4.77 lakh crore to compensate for the low budget capex, resulting in 20.5% growth in total capex.
 
3. For FY 19, both Revenue & Capital Expenditure are budgeted to grow 10% with flat off-budget capex.
 

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Budget tilts towards Populism after the focus on capex in the first 4 years. Though no rural specific schemes have been announced, higher Minimum Support Prices and greater allocation to food subsidy seem to be aimed at reliving farm distress
 
1. One of the Big Headlines of the Budget 2018 was FM announcing that MSP will be 1.5 times Cost of Production (CoP). According to the FM, FY18 Rabi MSP has already declared at least 1.5x the cost of production (Avg increase in Rabi crop MSP in FY18 was 8.3%). Therefore expect Kharif MSP to be higher in the similar range.
 
2. The provision for higher MSPs is visible in the food subsidy – the FY 18 RE implies a growth of 27% over FY 17 and the FY 19 BE implies a 21% growth over FY 18.
 

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3. For other rural oriented schemes, the spending growth is on the lower side – 7.8% FY 18 RE and 6.5% FY 19 BE. The RE for FY 18 is 5% more than the original budget, with MNREGA allocation increased by 15% from Rs. 48,000 cr to Rs. 55,000 cr. Total allocation under the head ‘Rural Development has been increased 2.8% in FY 19, after a 19% increase in FY 18 BE.
 
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Infra spending muted over a high base as budget expenditure gets the cut in FY 18 RE – focus on off-budgetary sources to boost capex.
 
1. Total capital expenditure in FY 18 up 20.5% in FY 18 RE, Budget expenditure down 5% (Rs 2.73 lakh cr) and non-budget expenditure up 41% (Rs 4.77 lakh cr). In FY 19, total capital expenditure is expected to increase 4% (10% from budget and flat off-budget)
 
2. Focus on Roads and Railways with healthy double digit growth in both segments both in FY 18 and FY 19. Budgeted Growth in other segments muted.
 
3. Allocation to housing muted. Allocation to the flag-ship Pradhan Mantri Awas Yojna cut by 5% for FY 19 ( Rs 27,505 cr) after a strong 39% increase in FY 18. Also, a major chunk of this amount directed towards Rural Housing (Rs 21,000 cr). Government will also establish a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government of India. In addition budget document mentions Internal Extra Budgetary Resources (IEBR) for PMAY (Urban) at Rs25,000cr. If this fund is implemented, total allocation to housing gets bumped up to Rs 52,500cr. We await details on this fund.
 

Total Capex: Budget + off-budget
 
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Budget Capex
 
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Subsidies up 15% in FY 19 BE and 12.6% in FY 18 RE as compared to 10% and 12% growth in total expenditure, respectively.
 
1. Growth in subsidies led by 20% + growth in food in both years.
 
2. Despite the recent surge in oil prices and halt in price hikes on subsidised LPG, the government has kept its FY19 petroleum subsidy estimate unchanged at Rs 250bn (flat over FY18). While FY18 estimates appear in line, the FY19 figure (at US$ 65/bbl oil price) looks low vis-à-vis estimated Rs 290bn (without subsidised LPG price hikes). This marginally raises doubts over whether the government will continue with its reform agenda of sparing ONGC, OINL and OMCs the subsidy burden.
 
3. Total fertiliser subsidy allocation is Rs 700.8 bn (Rs 449.89 bn for urea and Rs 250.90 bn for complex fertilisers). Revised estimates for subsidy allocation in FY18 are Rs 650 bn (Urea is at Rs 427.2 bn and complex fertiliser at Rs 222.5 bn). Actual FY17 total fertiliser subsidy stood at Rs 663.1 bn. The subsidy is largely flat (up 7.8%). Any steep increase in raw material price would nudge players to increase MRP.
 
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Fiscal math looks largely credible:
 
1. The budget math looks credible, with the government targeting to increase spending by 10.1%YoY. Assumptions on the tax revenue front (direct and indirect taxes) look largely achievable – more for direct tax collection growth than GST collections, given the uncertainty around GST collections until now. The divestment target of Rs800bn, while achievable, could be slightly ambitious in context of a busy election year.
 
2. Growth in Corporate tax (10%) and Income tax (20%) appears reasonable, given the past trends though growth in Indirect taxes at 19% appear on the higher side given the recent GST-led disruptions.
 
3. FY 19 Divestments are pegged at Rs 80,000 cr from Rs. 1,00,000 cr in FY 18. Other capital receipts, including spectrum are also reasonable.
 
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Fiscal deficit pegged at 3.3% – nominal GDP growth assumption of 11.9% in FY 18 and 11.3% in FY 19 appears reasonable.
 
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The source of all data presented here are Budget Documents.
 

Disclaimer:
 
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
 
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the stocks may or may not continue to form part of the scheme’s portfolio in future. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

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Suyash Choudhary

The Union Budget 2018 came in the backdrop of an extremely nervous bond market. The reasons for the massive sell off in bonds over the past 6 months is well documented before. The latest skittishness has been over a sharp rise in oil prices and considerably deliberate (but mysterious) uncertainty being introduced with respect to the current year’s borrowing calendar. On the latter, the government/ RBI have largely wasted the announced INR 30,000 crores reduction in extra borrowing in terms of its effect on bond yields. Thus for some strange reason it was decided to cut the borrowing from the longest 2 securities for the most part (where there was presumably assured demand from insurers) rather than the so-called ‘belly’ of the curve (where the pain was maximum from lack of absorptive power of general market participants).

 

Given this context, the bond market was hoping to be delighted by the Budget. Had the finance minister chosen to stick to the initial glide path on fiscal deficit and announced 3% deficit target for FY19, that would have constituted such a delight. As it turned out, the minister revised current year’s deficit to 3.5% and announced 3.3% for the year ahead. Having said that, he also adopted recommendations of the new FRBM with a commitment to reach 3% by FY 21.

 

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The table above highlights some key metrics from the budget. As things stand, it is a prudent enough budget. Thus total expenditure grew by 12.3% in FY18 while the nominal GDP grew by 10%. However, in FY19 total expenditure is budgeted to grow by only 10.1% even though nominal GDP growth is higher at 11.5%. Thus there is decided compression in expenditure to GDP despite calls for a ‘stimulatory’ budget. Furthermore, there is more reliance on tax revenues to fund spending with budgeted capital receipts scheduled to rise only modestly. There are some questions pertaining to the aggression assumed particularly related to the GST collections. However, this remains an evolving situation and with compliance stabilizing and a cyclical recovery underway, the government may yet meet the target. From an aggregate receipts standpoint, there is some cushion possibly this time on the disinvestments receipts which can be leaned on more heavily later in the year should tax receipts undershoot.

 

The bond market has also been unnerved by the announced intention of setting MSP at 50% higher than cost of produce for the crop. However, there are quite a few caveats here that one should remember. One, the finance minister said that this formula has already been applied for the Rabi MSP announcements made. While these MSPs were higher, they weren’t extra-ordinarily so. This then means that a similar magnitude should be expected in the Kharif crops for next season as well. This is demonstrated in the table below:

 

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Two, MSPs influence prices for only a small minority of crops. Actual market prices may vary significantly from MSPs. This has been the case over the past year where some notable crop prices have been significantly below MSP. Thus what matters is that actual procurement should be significant and widespread. The Niti Ayog in consultation with state and central governments is to formulate a plan for this to happen, subsequent to which it may get implemented. This may take upwards of a year, a sense one got when hearing some of the views yesterday. Three, this hike may also be considered in the nature of a fiscal transfer where the government(s) bear the difference between MSP and market price as a means of supporting farmers. Therefore, even once the operation is fully functional, the entire hikes may not reflect in market prices. Fourth, the government is also on a mega-drive to link all APMCs via the e-NAM network. This may actually lead to intermediary margins coming off thereby compensating in end product prices for some eventual rise in farm level prices. All told then this is too early to react on the MSP news.

 

Going Forward

 

To us discussions with respect to RBI’s hawkishness are increasingly turning irrelevant. It is a given that the RBI will be hawkish. The question only is that, given underlying macros and the state of the economy, is it willing to go ahead and hike 75 bps over the course of the next year or so? If that is the case then the current level of bond yields may be justified. However, it would put current term spreads in close vicinity of the levels seen in 2013 when India had a full blown macro-crisis. Pretending that we have a macro-crisis when we don’t have one can eventually prove dangerous to broader financial stability as well. The central banker should take into account the fact that financial conditions, as denoted by market yields and liquidity, have already tightened considerably even as the economy itself is only just recovering from a prolonged downturn.

 

Our preference has been largely for front end rates (upto 5 – 6 years) where the element of rate hike pricing has been most extreme. This remains the dominant portion of our portfolio. However, we are increasingly also more inclined to tactically increase the ‘beta’ portion of the portfolio gradually. From an investors standpoint, while the level of pain recently has been almost unprecedented, it must be remembered that bond yields are beginning to stand out now from a stand point of cheapness of valuation.

 
Disclaimer:
 

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

 
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the stocks may or may not continue to form part of the scheme’s portfolio in future. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

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