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Slowing food articles inflation provides some respite to sovereign yield.
Government securities
Sovereign yield saw support from the slowing weekly food articles inflation
number. For the week ended 8th Jan, the food articles inflation eased to 15.52%
from 16.91% a week ago. However the overall sentiment continues to be jittery,
owing to the uncertainty of the pace of policy rate increase from the central bank.
Fresh supply of securities amounting to INR 110bn tomorrow also weighed in on
sentiment. Market participant’s hesitation is visible from the muted volumes on the
trading platform. The average volume in the last fortnight was INR 54bn compared
to an average of INR 44bn so far this week. The 7.80% 2020 bond closed 5bps
lower at 8.13% while the more liquid 8.13% 2022 bond closed 3bps lower 8.17%.
Swap rates also eased marginally taking cues from the sovereign yields. The one
year swap closed 2bps lower at 7.43% while the five year swap closed at 8.01%,
down 4bps from Wednesday’s close.
Non-SLR market
CD issuance also remained slow as fund houses were on the sidelines on view that
the short term rates would rise due to the deteriorating liquidity and the
expectation of strong policy action from the central bank. Axis Bank placed INR
3.50bn of one year CD at 9.90% while Indian Bank placed one year CD at 9.80%
for a quantum of INR 1bn. Federal Bank placed INR 1bn of three month CD at
9.35% and INR 2bn of June maturity CD at 9.75%.
Money markets
Overnight market volume continued to edge lower at INR 667bn today compared
to INR 700bn on Wednesday. Bank preferred to borrow at the repo window
clocking in INR 1.13trn today in order to meet the fortnightly reserve requirement.
Although the central bank was able to tame the strained liquidity in the last
fortnight, the sluggish government spending and weekly borrowing has again push
the system liquidity above the comfort zone.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Slowing food articles inflation provides some respite to sovereign yield.
Government securities
Sovereign yield saw support from the slowing weekly food articles inflation
number. For the week ended 8th Jan, the food articles inflation eased to 15.52%
from 16.91% a week ago. However the overall sentiment continues to be jittery,
owing to the uncertainty of the pace of policy rate increase from the central bank.
Fresh supply of securities amounting to INR 110bn tomorrow also weighed in on
sentiment. Market participant’s hesitation is visible from the muted volumes on the
trading platform. The average volume in the last fortnight was INR 54bn compared
to an average of INR 44bn so far this week. The 7.80% 2020 bond closed 5bps
lower at 8.13% while the more liquid 8.13% 2022 bond closed 3bps lower 8.17%.
Swap rates also eased marginally taking cues from the sovereign yields. The one
year swap closed 2bps lower at 7.43% while the five year swap closed at 8.01%,
down 4bps from Wednesday’s close.
Non-SLR market
CD issuance also remained slow as fund houses were on the sidelines on view that
the short term rates would rise due to the deteriorating liquidity and the
expectation of strong policy action from the central bank. Axis Bank placed INR
3.50bn of one year CD at 9.90% while Indian Bank placed one year CD at 9.80%
for a quantum of INR 1bn. Federal Bank placed INR 1bn of three month CD at
9.35% and INR 2bn of June maturity CD at 9.75%.
Money markets
Overnight market volume continued to edge lower at INR 667bn today compared
to INR 700bn on Wednesday. Bank preferred to borrow at the repo window
clocking in INR 1.13trn today in order to meet the fortnightly reserve requirement.
Although the central bank was able to tame the strained liquidity in the last
fortnight, the sluggish government spending and weekly borrowing has again push
the system liquidity above the comfort zone.
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