Volatility indicators show signs of cooling down

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Markets update

India VIX has continued to cool off and dropped to 42.5925 on Friday. It has dropped 32.3% over the last 1 month
Benchmark indices ended the week with modest gains. Nifty 50 closed up 1.7% at 9266.75 and Sensex closed at 31588.72, up 1.38%. Nifty 500 also gained 2.32% during this period
On Friday, the RBI cut the reverse repo rate by 25 basis points to 3.75% to discourage banks from parking their excess liquidity with the central bank
RBI also announced that it would be injecting ₹50,000 Cr via targeted long-term repo operations, so that banks provide more liquidity, specifically to small and mid-sized NBFCs and micro-finance institutions. Another ₹50,000 Cr special finance facility will be provided to financial institutions such as Nabard, Sidbi, NHB
CPI fell to a four-month low of 5.91% year-on-year in March 2020 from 6.58% in the previous month
WPI was 1.0% year-on-year in March 2020 below market expectations of a 2.0% rise

Other updates

Last week, PM Modi extended the pandemic related lockdown till May 3rd. He stated that while India had performed better in countering Covid-19 than other advanced and more prosperous countries, an extension of the lockdown was necessary
The Government has allowed business activities in a restricted manner. Industries operating in villages, industrial estates, Special Economic Zones and Export Oriented Units have been allowed to operate subject to certain restrictions
Commercial activities in agricultural and allied industries, essential sectors and IT / ITES sectors have been permitted
According to India Metrological Department, India’s southwest monsoon this year is expected to be ‘normal’ at 100% of the long period average which is a positive development for the farm sector and a good harvest is expected to push up India’s agriculture growth rate in 2020-21

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Naveen K R

Senior Director, Windmill Capital | The content in this article is purely the author’s personal opinion and is for informational and educational purposes only. It should not be construed as professional financial advice and nor to be construed as an offer to buy /sell or the solicitation of an offer to buy / sell any security or financial products. The views and opinions stated in the content belong to the author. Windmill Capital Private Limited does not uphold nor promote any of the views / opinions. | Windmill Capital Private Limited is a SEBI registered research analyst (Regn. No. INH200007645)

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