RBI on Gold Buying Spree
The RBI in the first six months of CY2021 has purchased 29 tonnes of gold. It is the highest ever purchase. The country's gold reserves have crossed 700 tonnes for the first time, a surge of 27% from 558.1 tonnes at the start of 2018.
While India's overall forex reserves are constantly swelling, the proportion of gold is steadily declining. The overall share of gold in the central bank's forex reserves has dropped to 6.5% in June 2021 quarter, from 7% in March 2021.
As gold's contribution to the overall forex kitty has declined, buying gold will help to achieve diversification and better risk management. Gold prices have also seen a sharp decline in recent months. Hence, providing an ideal opportunity to stock up the gold buffer.
Beware of Online Frauds
Digital payment methods are quickly gaining ground in India. RBI's annual report suggests the banking system has practically reached full electronic mode with a total volume of digital payments in non-cash payments increased to 98.5% during 2020-21 as compared to 92.5% during 2017-18.
With this, however, fraudulent activities are also on the rise. The credit bureau TransUnion reported a 28.32% increase in suspected fraudulent digital transactions during FY21 over the previous year. While using digital payment systems for convenience, it is the rise in the number of fraudulent activities that investors need to be cautious about.
Split Before Listing?
The government is mulling the idea of splitting LIC's upcoming IPO into two parts. It could be offered for subscription within a gap of a few months, considering the size of the issue.
The government is looking to raise close to Rs 1 lakh crore by listing LIC on bourses. It is likely to be the biggest IPO ever, and the market may not have enough liquidity to absorb it in one go.
LIC's overall valuation is likely to go above Rs 10 trillion. It will put the company straight in line with the biggest listed entities in India, such as Reliance Industries and TCS.
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