Financial update-Day 2

 

Day 2

From today onwards I would try to give some technical commentary on this three stocks.

Name

Open

High

Low

Close

HDFC

1681.10

1684.20

1661.10

1677.00

Bank of Baroda

208.00

209.42

206.50

208.85

SBI

710.50

719.75

710.50

716.4

 

  Commentary on the above-mentioned stocks on a technical basis.

HDFC on the 1-day chart it is having support of 200 EMA (moving average exponential) at 1680.27 for several days but today it slipped to 1677.10. If it drops from here, it will face a long down rally because the next support is at 1620.

SBI, in the 1-day chart this stock had the support of 200 EMA from September 2024 to 30 December 2024, after that, it struggled to hang at the same price level but by January 2025 it fell and till then it had a long downtrend.

BANK OF BARODA, In 2023 November I bought this stock at around 190rs, then it showed a long uptrend till June 2024 when it reached a time high at 300rs. After that, it was sideways revolving around 200EMA till December 2024. The beginning of 2025 is not good for this either, it is showing a downtrend till now.    

 

WHAT IS BANKING LIQUIDITY AND IT IMPACT ON BANKING SYSTEM.

Banking liquidity refers to banks’ ability to pay day to day expenses and able to fulfill withdrew demand, in short money which bank have in its hand.  In the recent scenario net liquidity in the banking system is turned into deficit in month of January 2025. Net liquidity is equal to difference between the amount borrowed by banks from RBI and the amount deposited with the RBI. Currently our system hit 3.2rs lakhs core.  The RBI measures to infuse liquidity helped to narrow the deficit.


HOW RBI MANAGES BANKING LIQUIDITY. (Credit to ET Wealth and Sameer Bhardwaj)

RBI uses various approaches to manage liquidity in our banking system.

 

  • CRR – cash reserve ratio:

RBI cut CRR by 50 bps to 4% in December 2024. A higher CRR reduces liquidity, whereas a lower CRR increases the liquidity. By reducing CRR RBI tried to increase the liquidity of banks. By this cut RBI infused 1.2rs lakhs.

  • OMO – open market operations:

RBI is buying 60,000rs G-sec paper (Government security issued by state or central)

  • 56-day VRR-Variable repo rate:

It is an auction process wherein banks borrow short-term funds from the RBI at a variable rate, which is decided through market-based auctions. RBI announced a long-term VRR of 50,000 cores in January.

  • USD-INR buy-sell swap:

RBI announced a $5 billion swap ( it is a financial derivatives contract where two parties exchange cash flow or liabilities based on a predetermined agreement) for the tenure of six months, in It will buy $5 billion from the bank which will infuse similar amount of rupees in the system.

(Note: - This is just for study purpose only)


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