Relief for telecoms, solar industry, and US Federal Reserve meeting: Three things Teji Mandi investors should know on July 28, 2021

07:12 PM Jul 28, 2021 | Teji Mandi

Relief in Sight for Telecoms?

After prolonged deliberation, the government appears set to unleash a few relief measures for the telecom sector. The government could relook to exclude non-telecom items from Adjusted Gross Revenue (AGR), reduce license fees (LF) and spectrum usage charges.


The government is unlikely to take a company-specific view. Rather, it is likely to adopt relief measures from the overall sector's perspective. Hence, any relief measure, if announced, will be a lifeline for VodafoneIdea. On the other hand, other telecoms further strengthen their position in the market.


Solar Industry in Panic

Domestic solar manufacturers are staring at uncertain times ahead as the term of import duty protections is coming to an end.

Indian manufacturers currently enjoy safeguard duty (SGD) of 14.5% on imports of solar equipment. As per the WTO rule, SGD can be applied only for four years. India is currently in its third year. If India opts to extend SGD for the fourth year, it will still require to reduce duty as per the provisions of WTO.

Cheap Chinese imports are the major threat to the domestic solar industry. SGD protects them from aggressive onslaught to an extent. With SGD reduced or removed, the market will be flooded with Chinese products, killing the domestic industry. That is a major threat that the industry is facing, and expecting the government to find a way out.

What’s on Fed’s Mind?

The US Federal Reserve's meeting has started amid much anticipation about its latest possible move. The committee is likely to consider a sharp rebound of the US economy to arrive at a possible decision.

While Fed is unlikely to take any rate hikes, the market will be keen to observe Fed's position on its asset purchase program. During its last policy statement, Fed had hinted to slow down its asset purchasing program, including bond purchases.

If the Fed curtails its asset purchasing program, it will squeeze out liquidity from the market. It will have an adverse impact not just on the US but stock markets across the globe. Any possible squeeze on liquidity could lead them towards a correction after a vertical rally since recovery.

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