Small banks may keep off RBI’s FX swap bid

Reliance Communications Enterprises (RCE) has pledged

4.52 per cent of its holding in RCom amounting to 12.50 crore shares with IndusInd Bank. RCE held 49.06 crore shares in RCom amounting to 17.74 per cent stake. With the latest pledge on March 22, the total pledged shares by RCE now stands at

9.37 per cent of total share capital or 25.90 crore shares. New Delhi, March 24: Housing prices rose by a modest 7 per cent in seven major cities during the past five years, while sales and new supply have declined 28 per cent and 64 per cent, respectively, according to brokerage firm Anarock.

Anarock Founder and Chairman Anuj Puri said the prices in primary markets have seen more of a "time correction" rather than a price correction, with average prices across top-seven cities seeing a meagre 7 per cent increase in the past five years.

"Considering inflation (assuming seven per cent a year), all cities will have seen negative price trends in the last five years," he added.

These seven cities are Delhi-NCR, Mumbai Metropolitan Region, Chennai, Kolkata, Beng-aluru, Hyderabad and Pune.

The supply of new housing units reduced by 64 per cent in the past five years—from 5.45 lakh units in 2014 to 1.95 lakh units in 2018. Housing sales were also slow, dropping by 28 per cent during the same period—from

3.43 lakh units in 2014 to

2.48 units last year. Mumbai, March 24: The Reserve Bank of India's forex swap sale this week may be fully subscribed thanks to foreign and private banks including big PSBs banks, while a shortage of dollar may keep small banks away, experts said.

The RBI earlier this month announced it would inject rupee liquidity by swapping dollars at a market-determined premium on Mar 26.

"Although, we may see very few PSBs with the exception of big PSUs like State Bank of India and Bank of Baroda to actively participate in the FX swap auction, private and foreign banks may ensure that the auction is fully subscribed," said a dealer with a public sector bank.

Foreign banks with higher number of branches abroad will find it easier to raise dollar funds, which might be an issue for smaller public sector banks.

Most PSBs may lack dollar funding required for participating in the auction amid pricing issue.

However despite the shortage of dollar, Pranesh Upadhyay, Managing Partner at BlacPearl Consultancy aid, "We may see FX swap auction to be fully subscribed mostly with banks selling the swap at a premium of 4-4.5 per cent from the current market level."

Also, dealers believe PSU bank may find it difficult to keep their exposure open for an extended time.

On the pricing front, the dealer with a public sector bank said that the RBI would not be comfortable if the premia is below Rs 5.50-6.00 for the three-year swap.

Forward premia for dollar maturing in three-year ended at Rs 7.82 on Friday compared to previous close of Rs 7.41.

The RBI, in a bid to mop up dollars and pump in rupees, said earlier this month that it will conduct its first dollar/rupee buy-sell swap auction on Mar 26.

— TickerNews Service New Delhi, March 24: Foreign investors have poured in a net Rs 38,211 crore in the domestic capital markets in March so far, mainly on account of improved global liquidity.

In February, foreign portfolio investors (FPIs) had put in a net amount of Rs 11,182 crore in the capital markets — both debt and equity.

Analysts attributed the increase in infusion to a shift in stance on monetary policy outlook by various central banks globally.

According to depository data, foreign investors pumped in Rs 27,424.18 crore in equities, while the debt market saw a net infusion of Rs 10,787.02 crore during March 1-22 — taking the total to Rs 38,211.20 crore.

As per Harsh Jain, Chief Operating Officer of Groww, the cooling of US-China trade war and no hike in interest rates by the US Fed has made India attractive to FPIs. Other factors like stable crude oil prices have also helped. — PTI