/ -- The announcements by the Finance Minister yesterday coupled with the announcements from the RBI today should provide a lot of relief in the face of the unprecedented situation that the economy and financial markets face today.
The specific announcements are extremely positive and address a broad range of issues. The CRR, Repo rate and other adjustments address the liquidity side of the equation.
Siddharth Mehta, Founder & CIO, Bay Capital said that the moratorium on all term loans and relief on interest on working capital addresses the liquidity challenges and the new TLTRO provides for a Rs 1 lakh crore facility where by banks availing of this have to in turn use that to invest in CP's and other instruments (and will be classified as HTM), the liquidity for which has completely dried up.
All in all, these are extremely positive measures and together with recent announcements add up to an injection of approximately $50 billion of liquidity. More than anything else, the commentary from the Governor about 'doing what it takes' echoes the comments from the policy makers globally. Other regulatory adjustments and participation of select banks in the offshore NDF market are also extremely positive, Siddharth added further.
Speaking on the Government of India's measures, Sid Mehta, Bay Capital emphasised that although the health side of the epidemic relating to the containment of the virus will be extremely important, in these uncertain and challenging times, these measures are extremely welcome and should be viewed extremely positively. Moreover, people should have complete confidence that policy makers in India stand ready to act proactively, as required, to mitigate any adverse effects that may emerge over time.
About Bay Capital:
Bay Capital Partners is a leading independent India focused investment manager established in 2006. Bay Capital invests in publicly traded securities in India and aims to deliver consistent compounding risk adjusted returns by investing in a concentrated portfolio of businesses that are market leaders with moats incredibly difficult to breach. Bay Capital believes in an 'equity yield curve' where returns increase with time. Bay Capital investors include large global endowments, foundations, family offices and pension funds.
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