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PM announces mission to make India self-sufficient in edible oils

Prime Minister Narendra Modi on Monday announced a National Edible Oil Mission-Oil Palm (NMEO-OP) to make India self-sufficient in cooking oils, including palm oil, as he stressed on reducing the dependence on imports. Addressing a virtual event on PM-Kisan scheme, he said over Rs 11,000 crore will be invested in the edible oil ecosystem.

The Prime Minister also transferred over Rs 19,500 crore to over 9.75 crore farmers under the government’s flagship PM-Kisan scheme. On the occasion, Modi said while India has become self sufficient or Aatamnirbhar in production of rice, wheat and sugar, but it was not enough as the country is dependent on huge imports of edible oils. Modi stressed India must become self reliant in edible oil too as he announced NMEO-OP.

The Prime Minister said the government will ensure that farmers get all facilities, from quality seeds to technology to promote farming to produce palm oil and other oil seeds. It is to be noted here that India is dependent on imports of edible oil to meet the domestic demand. Of the total imports, palm oil constitutes about 55 per cent.

The country spent thousands of crores of rupees on edible oil imports, Modi said, and added that this money rather should go to farmers. The Prime Minister said north-eastern states and Andaman and Nicobar Islands could be promoted for palm farming.

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RBI to pump Rs 50,000 crore via G-SAP 2.0 in August

The Reserve Bank of India on Friday said it will undertake a secondary market government securities acquisition programme or G-SAP 2.0 worth Rs 50,000 crore in two tranches this month to enable an orderly evolution of the yield curve.

“Our recent G-SAP auctions that have focussed on securities across the maturity spectrum are intended to ensure that all segments of the yield curve remain liquid,” RBI Governor Shaktikanta Das said while announcing the third bi-monthly monetary policy. The Reserve Bank’s secondary market G-sec acquisition programme (G-SAP) has been successful in anchoring yield expectations while eliciting a keen response from market participants, he noted.

“We propose to conduct two more auctions of Rs 25,000 crore each on August 12 and August 26, 2021, under G-SAP 2.0. We will continue to undertake these auctions and other operations like open market operations (OMOs) and operation twist (OT), among others, and calibrate them in line with the evolving macroeconomic and financial conditions,” he said.

Under the revised liquidity management framework announced on February 6, 2020, the Reserve Bank has been conducting 14-day variable rate reverse repo (VRRR) auctions as its main liquidity operation. With the commencement of normal liquidity operations, the VRRR, which was temporarily held in abeyance during the pandemic, has been re-introduced from January 15, 2021, and the initial absorption of Rs 2 lakh crore has been rolled over in the subsequent fortnightly auctions, Das said.

In parallel, access to the fixed-rate overnight reverse repo has been kept open, he said, adding markets have adapted and even welcomed the VRRR in view of the higher remuneration it offers relative to the fixed-rate overnight reverse repo.

“Fears that the recommencement of the VRRR tantamount to liquidity tightening have been allayed. We have seen a higher appetite for the VRRR in terms of the bid-cover ratio in the auctions,” he noted. Considering all these aspects, it has now been decided to conduct fortnightly the VRRR auctions of Rs 2.5 lakh crore on August 13, 2021; Rs 3 lakh crore on August 27, 2021; Rs 3.5 lakh crore on September 9, 2021; and Rs 4 lakh crore on September 24, 2021, he said.

“These enhanced VRRR auctions should not be misread as a reversal of the accommodative policy stance, as the amount absorbed under the fixed-rate reverse repo is expected to remain more than Rs 4.0 lakh crore at the September-end 2021. Needless to add that the amount accepted under the VRRR window forms part of system liquidity,” he said.

On additional liquidity measures, the governor said the scope of the on-tap TLTRO scheme, initially announced on October 9, 2020, for five sectors, was further extended to the stressed sectors identified by the Kamath Committee in December 2020 and bank lending to NBFCs in February 2021.

The operating period of the scheme was also extended in phases till September 30, 2021. Given the nascent and fragile economic recovery, it has now been decided to extend the on-tap targeted long-term repo operation (TLTRO) scheme further by a period of three months till December 31, 2021, he said.

On March 27, 2020, he said, banks were allowed to avail of funds under the marginal standing facility (MSF) by dipping into the Statutory Liquidity Ratio (SLR) up to an additional one per cent of net demand and time liabilities (NDTL), i.e. cumulatively up to 3 per cent of NDTL.

To provide comfort to banks on their liquidity requirements, including meeting their Liquidity Coverage Ratio (LCR) requirement, this relaxation which is currently available till September 30, 2021, is being extended for a further period of three months, up to December 31, 2021. This dispensation provides increased access to funds to the extent of Rs 1.62 lakh crore and qualifies as high-quality liquid assets (HQLA) for the LCR.

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Asian stocks sink after Wall St pulls back from record

Asian stock markets declined Wednesday after Wall Street pulled back from a record as investors awaited a Federal Reserve report for signs of when US stimulus might be withdrawn. Investors also were uncertain how much farther China will go with a regulatory crackdown that set off a slide in its internet share prices. Shanghai, Tokyo and Sydney retreated while Hong Kong advanced.

Investors were digesting US earnings reports while worries increased after the Centers for Disease Control and Prevention recommended even vaccinated people return to wearing masks indoors in areas where the coronavirus’s more contagious delta variant is spreading. “Investors turned cautious,” said Edward Moya of Oanda in a report.

A meeting of the Federal Reserve board that began Tuesday is expected to bring an update on when the US central bank might start to reduce bond purchases that inject money into financial markets and keep interest rates low. The Shanghai Composite Index lost 0.6 per cent to 3,363.00, declining for a third day, while the Nikkei 225 in Tokyo fell 1.5 per cent to 27,561.50. The Hang Seng in Hong Kong shed 0.2 per cent to 25,027.16.

The Kospi in Seoul lost 0.4 per cent to 3,220.17, while Sydney’s S&P-ASX 200 gave up 0.8 per cent to 7,369.70. New Zealand and Southeast Asian markets declined. On Wall Street, the benchmark S&P 500 fell 0.5 per cent to 4,401.46, snapping a five-day streak of gains. The Dow Jones Industrial Average dropped 0.2 per cent to 35,058.52. The Nasdaq lost 1.2 per cent to 14,660.58.

Selling was most pronounced in technology and communication stocks, and in companies that rely on consumer spending. Traders shifted money into sectors seen as less risky, including utilities, health care and in companies that make household and personal goods. Shares in Chinese internet giants slid for a third day as investors waited for possible new action after Beijing stepped up anti-monopoly and data security enforcement against the industry. They were reported to be considering restrictions on for-profit education ventures.

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Zomato, Naukri.com shares may not make it to Nifty 50 this time, but strong case for future entry

New age internet shares such as Zomato and Info Edge (naukri.com) may not make it to the benchmark NSE Nifty 50 index in the impending review next month, despite having a high market capitalization. However, Info Edge is the best possible contender for a spot in Nifty 50 in future reshuffles, ICICI Direct said in a report. Zomato too has a bright chance of making it to Nifty 50 in the future. “New large-cap internet platform companies like Zomato with high free-float market cap due to zero promoter holdings could be serious contenders for entry into the benchmark indices going ahead,” the report said.

Info Edge stock: Falling short on free float
Info Edge’s average free-float market capitalisation is below that of Indian Oil — the smallest free-float market cap stock within the current Nifty 50 index. For a stock to qualify for inclusion, it should have an average free-float market capitalisation of at least 1.5 times the average free-float market capitalization of the smallest constituent in the index — where Info Edge falls short. “As per the index methodology, the investible weight factor (IWF) is determined as the amount available for trading and which is not held by entities having strategic interest in a company,” ICICI Direct said.

Entry into the benchmark Nifty 50 index is decided on the basis of a stock’s average market capitalization in the previous six months among other factors. Stocks that are currently a part of the Nifty 100 index and available for trading in NSE’s Futures & Options segment are picked for Nifty 50.

Info Edge best placed for future entry
Info Edge is still the best-placed stock to enter the index in the next reshuffle. “Info Edge will be the first pure-play internet platform company to be included in the NIFTY50 index as and when it qualifies,” ICICI Direct said. Putting things into perspective, the brokerage firm highlighted that even the US Dow Jones Industrial Average still doesn’t have any of the internet platform companies such as Amazon or Google as part of its constituents given the limitations of it being a price-weighted index.

Zomato, internet and new-age economy stocks gearing up to dominate
Now with the advent of the internet and the new-age economy, the three best-placed stocks to enter the index are Info Edge, Radhakishan Damani’s Avenue Supermarts (DMart), and Gautam Adani’s Adani Green Energy. “All the three stocks are notably from the new-age economy sectors of internet businesses, organised discount grocery retail with e-commerce incubation, and a green energy company, respectively,” the report said. DMart and Adani Green Energy currently fail to qualify for not being a part of the F&O list.

ICICI Direct said that Nifty 50 exclusion and inclusion trends reflect the emerging pockets of demand in the economy over the long term. Between 2003-2011, the rising investment rate drove demand in the economy and bulk of the stock additions to the index were from the investment and related credit cycle of the economy. Further, between 2012-20 bulk of the additions were from the consumption side of the economy.

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