Packing batteries with more punch
Indian researchers are working on cells that can store more energy, last longer
The Reserve Bank of India will conduct its second special open market operation (OMO), entailing purchase of a long-dated Government of India Security (GSec) and sale of four short-dated GSecs for ₹10,000 crore each on December 30.
This OMO, which market players call ‘Operation Twist’, is expected to further soften the yields of long-term GSecs. The first special OMO was held on December 23. After thist OMO, yields had softened a bit at the long-end of the GSec market.
In the latest round of special OMO, the RBI will purchase the GSec maturing in 2029 and carrying a coupon of 6.45 per cent for ₹10,000 crore under the multiple price auction method. It had purchased the same security in the last OMO.
The Reserve Bank will simultaneously sell four GSecs all maturing in 2020 but carrying four different coupon rates – 6.65 per cent, 7.80 per cent, 8.27 per cent and 8.12 per cent – under the multiple price auction method. The central bank had sold these securities in the last OMO also.
When the RBI does an OMO purchase, it infuses liquidity into the financial system. But when it does OMO sale, the central bank absorbs liquidity. If it does simultaneous OMO purchase and sale, then for the same amount then there is no effect on liquidity, but the yields could either go down or up. GSec yield and price move in opposite directions.
The ‘Operation Twist’ comes in the backdrop of the RBI maintaining a status quo on the policy repo rate at the fifth bi-monthly monetary policy review as against market expectation of a rate cut and G-Sec yields consequently going up.
At the special Open Market Operation (OMO) for purchase of the 10-year benchmark GSec on December 23, the RBI received 161 bids aggregating ₹20,826 crore against the notified amount of ₹10,000 crore.
The central bank accepted 145 bids for the notified amount at 6.5462 per cent cut-off yield and ₹99.30 cut-off price.
At the special OMO for sale of four GSecs (all maturing in 2020 but carrying different coupon rates – 6.65 per cent, 7.80 per cent, 8.27 per cent and 8.12 per cent), the RBI received bids aggregating ₹20,330 crore against the notified amount of ₹10,000 crore. But the central bank accepted bids for ₹6,825 crore.
Market players say the RBI may have conducted the special OMO to cool the yields at the long end as there is a possibility that the Central government may go in for additional borrowing if the Goods and Service Tax (GST) collections and resource raising via disinvestment fall short of the target.
Indian researchers are working on cells that can store more energy, last longer
To fix a broken bone, doctors often harvest another bone from the patient’s body or from someone else. It ...
Superconductors from IIScScientists at IISc Bangalore have invented a device with a nanocrystal structure ...
Engineering and construction giant L&T has won a licence from the Council of Scientific & Industrial ...
Will a stock continue its current trend or will it reverse? We tell you how you can read chart patterns to ...
Sensex and Nifty 50 saw selling interest on Friday and slumped; selling pressure could continue
Investors with a long-term horizon can consider this offer
Most AMCs have been sending out cryptic e-mails. We tell you how to read between the lines
In these isolated times when people yearn for a slice of the familiar, amateur and professional chefs are ...
Forget the tuna. The island nation will keep you full and happy with coconut, koftas and jasmine
This year, on Facebook, I saw that someone had posted a list of EASY RESOLUTIONS. I didn’t copy them down but ...
With strokes of quirky humour, Partha Pratim Deb uses pulp, terracotta, glass and discarded cloth to create ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor