Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
23 December, 2014 03:29 IST
Banking system liquidity is expected to worsen further: Nomura
Source: IRIS | 13 Feb, 2013, 11.41AM
Comments  |  Post Comment

The Reserve Bank on Tuesday said it will infuse Rs 100 billion into the financial system by purchasing government securities on Friday as part of liquidity injection measure. This was a response to the banking system liquidity deficit, which hit an estimated Rs 1.4 trillion.

Commenting on this development, Nomura Financial Advisory and Securities, said, ``
The main cause of the current liquidity deficit in the banking system is the build up of government balances. A reduction in government spending and disinvestment proceeds are the key factors which led to an increase in government balances to Rs 670 billion on February 1 to an estimated Rs 900 billion-1 trillion. Given the advance tax outflows on March 15, banking system liquidity is expected to worsen further. In addition, we expect currency demand to withdraw another Rs 200 billion from the banking system between now and March. Overall, the banking system liquidity deficit is expected to worsen further in March. In anticipation of this, we expect RBI to conduct two or three more OMOs between now and March. The OMO announcement is positive for bonds. We expect the 10-yr bond to move toward the lower side of the 7.75-95 range by mid-March. This should comfort the bond market, which should also reduce the paid hedging flows in belly of OIS (3yr-5yr tenor).``

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.

Comments Post comment 
 Post Comment
Name Email
Comment
Security Code type    into this box
Related Articles
SKS Microfinance issues commercial papers for Rs 250 mn - 22-Dec-2014 18:52
Investment opportunities by HBJ Capital - 22-Dec-2014 18:38
Sasken Communication allots shares under ESOP - 22-Dec-2014 18:25
Jet Airways closes 5 year syndicated loan of USD 150 mn in Middle East - 22-Dec-2014 18:13
Alstom to sell energy business to General Electric - 22-Dec-2014 17:32
Angel Broking prefers Hero Motocorp over Bajaj Auto - 22-Dec-2014 17:20
'Accumulate` Persistent Systems; target Rs 171: Prabhudas Lilladher - 22-Dec-2014 16:44
99acres.com partners with Purvankara Projects - 22-Dec-2014 16:29
Prabhudas Lilladher maintains `Buy` on Ashoka Buildcon - 22-Dec-2014 16:20
CMI bags order worth Rs 121.3 mn - 22-Dec-2014 16:08
HDFC to sell 18.9 mn shares of HDFC Standard Life Insurance to Premji Trust - 22-Dec-2014 15:22
more...
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer