Transcript of Chat with Mr. Pijush Das, V.P - Debt Investment Group, SBI Mutual Fund - 22nd Oct 2001
[04:33:50 PM] => Myiris : A very warm welcome to the chat session
[04:35:10 PM] => Myiris : Mr. Pijush Das will be joining us shortly
[04:35:47 PM] => DISCLAIMER :
[04:36:23 PM] => Mr. Pijush Das, V.P - Debt Investment Group, SBI Mutual Fund. At the time of this conversation / chat, Mr. Das may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Das is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Das, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:37:10 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:37:30 PM] => Lastly the views expressed by Mr. Das have no bearing whatsoever with that of IRIS Ltd. 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 www.myiris.com.
[04:37:57 PM] => Welcome to the chat session Mr. Das.
[04:39:40 PM] => Sunil: RBI has reduced both bank rate and CRR. Would it not be sufficient if they had cut just CRR?
[04:42:12 PM] => Das : Well, we normally shouldn't get into why and how of polcy statements.But you are right. Bank rate should be related to the general level of interest rates in the country. That stage has not been reached as has been observed by the Y. V. Reddy committee that small savings rates also need to be cut.
[04:42:26 PM] => CRR has been introduced as a risk control measure for banks when there was no ALM and capital adequacy norms. those issues have been largely addressed. therefore a crr cut was necessary as also the higher income on CRR.
[04:44:01 PM] => Neyha: RBI's growth projections is in the range of 5.0 per cent to 6.0 per cent.What is your view on it?
[04:44:17 PM] => Das : Looks ok to me
[04:44:55 PM] => Rohit: What are your reactions to the monetary policy unveilved by RBI today? What really will be the impact on interest rates? More importantly does it carry any benefit for small investors?
[04:45:56 PM] => Das : The best thing I like about the policy is the structural improvements in the financial system.
[04:46:16 PM] => Small investors can gain only if they were invested in debt mutual funds.their fixed depos or savings depos will not show appreciation.if one takes the view that the cycle can show more interest rate cuts then they shuld get into some instrument that has mark to market valuation facility.
[04:48:10 PM] => Priya : What is the impact of the monetary policy on the mf industry? Do you expect to see more inflows into debt funds?
[04:49:41 PM] => Das : Yes certainly. More inflows are most likely. We have said earlier and we say it now---rally in G-Secs certainly to be expected.
[04:50:58 PM] => manishm: RBI has cut Bank Rate by 0.5% and CRR by 2% - RBI is addressing the Supply side. What about demand? Who is going to address that?
[04:53:46 PM] => Das : The normal policy initiative to any market downturn is to cut interest rates.The alchemy of demand going up is someting that probably eludes even Mr. Greenspan. I'll only say this the Govt should reduce the leakages and provide good infrastructure and intelligent policy initiatives and reduce the bottlenecks. There shouldn't be any direct intervention.
[04:57:32 PM] => Sudha : How would you rate the policy released by RBI on a scale of 1 to 10 (1 being worst and 10 being best)? Which specific measures taken by RBI do you approve?
[04:59:24 PM] => Das : 7 on a 10 point scale-- structural reforms are the best part of the policy.
[05:01:59 PM] => Neyha :The reduction in CRR is expected to increase liquidity in the market, but except for these past few days due to the Rs 8000 cr auction liquidity was sufficient. So why the CRR cut? The RBI more over has the LAF to control the lendable resources that are available to banks. So why is the CRR cut necessary?
[05:03:26 PM] => Das : The RBI expects the busy season to be busy - in production activities - CRR cut is more on expectations that there will be more commercial lending without impacting the govt borrowing program.
[05:04:47 PM] => shraddha : What effect do you see the bank rate cut having on the yield curve? Do you see the yield curve shifting backwards?
[05:06:48 PM] => Das : Obviously a parallel shift downward by 25 to 30 basis points. But the longer end should come off by much more than the shorter end.
[05:08:45 PM] => Arun: The months of September and October saw an increase in trading activity in the long and medium dated securities. Why was this so? Do you think this reflected the market expectationbs on a bank rate cut?
[05:12:02 PM] => Das : Yes obviously. But as the 22-10-01 arrived most people became jittery and started booking profits - because the governor prefers not to announce monetary measures in the policy.
[05:12:42 PM] => Soumya: On the one hand CRR is cut, on the other, the interest on CRR balancesw is increased? are this not mutually contradictory?
[05:14:45 PM] => Das : No, it is not. Interest payable on CRR is linked to the bank rate. Its realistic. It must be linked to real investment rates.
[05:15:47 PM] => Soumya: Effect of portfolio by taking positions in long dated securities before the policy, what will the funds do now?
[05:16:38 PM] => Das : You see not everyone was very bullish on the rate cuts - by bullish I mean putting ur money where your views are.
[05:16:52 PM] => That is why most prices were stuck at 9.10 for the ten year G-Secs yield. So I feel most people were bullish on views but not in actions. So those who did not join the bus earlier may do so now. First stop for 10 year yield could be 8.75%.
[05:17:43 PM] => Soumya: STRIPS facility, how is it bgoing to benefit?
[05:18:51 PM] => Das : Will help the retail market - zeroes would be possibly available - financial engineering will get a filip.
[05:19:10 PM] => Ravi: What will be the impact of the RBI cutting the Bank Rate by 0.50 percentage point, from 7.0 per cent to 6.50 per cent?
[05:19:27 PM] => Das : No comments
[05:20:18 PM] => Soumya : Do you honestly expect credit to pick-up?
[05:22:24 PM] => Das : Just on the monetary measures - normally investment let down turns take a while for turning around. One possible indicator is the stock market.
[05:26:19 PM] => Myiris : We'll continue the chat in a short while. Mr. Das is busy.
[05:42:24 PM] => For the latest on monetary policy - reactions, impact and analysis....log on to myiris.com
[05:53:56 PM] => Myiris : Please bear with us for the delay....we'll continue the chat in a short while.
[06:23:45 PM] => Myiris : Mr. Das is away due to some urgent work. he'll be answering the questions shortly. Please standby.....
[06:33:59 PM] => Myiris : Due to unavoidable circumstances Mr. Das will not be able to continue with the chat. We apologise for the delay.
[06:34:10 PM] => Myiris : We'll put up the answers for the rest of the questions along with the transcript of the chat.
[06:34:34 PM] => Myiris : Thank you all for your participation.
[06:35:02 PM] => Myiris : We thank Mr. Das for his views and insights
[06:35:45 PM] => Myiris : Bye for now..please do join us for the next chat session at myiris.com
