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Surge in food inflation continues to worry, benchmark closes at 8.16%
Government securities
Yields closed marginally higher as a sharp spike in the weekly food articles inflation
weighed in on the sentiment. Underlying sentiment continues to remain bearish
due to the uncertainty about the movement of the key policy rates due to the
inflationary pressures. In the week ended Jan 22, food articles inflation surged to
17.05% from 15.57% a week before. Primary articles inflation rose to a four week
high of 18.44% from 17.26% a week ago. A mild rate hike at the last policy meet
on 25th Jan and the surging inflation (despite active intervention) has created an
expectation that RBI will continue with its tightening cycle. OIS rates did not see
any easing despite the improvement in the liquidity due to the concerns of soaring
prices. One year and five year OIS closed at 7.41% and 8.03% respectively.
Non-SLR market
One year CD rates continued to remain at the 10% level with banks with raising
funds through issuance to fund the robust credit growth. Three month CDs traded
in the 9.60%-9.70% band in today’s trade. Syndicate Bank raised INR 10bn via
three month CD at 9.70%. Vijaya Bank and Canara Bank placed INR 6bn and INR
5bn of three month CD at 9.77% and 9.68% respectively. PNB raised one year CD
for a quantum of INR 3bn at 9.94% while IDBI Bank placed one year CD for INR
3bn at 9.95%.
Money markets
Government expenditure inflow at the beginning of the month has provided
significant respite to the system liquidity. LAF borrowing plunged to its lowest level
since Nov-10 to INR 466bn. Compared to an average borrowing of INR 1trn in the
last fortnight, banks have borrowed on average only INR 770bn this fortnight
mainly on account of the accelerated draw down of the government cash balances.
Overnight rates traded below the central bank’s lending rates with call rates
ending at 6.50% while the CBLO rates closing at 6.41%. The volumes at the CBLO
window continued to be robust at INR 686bn due to the banks preference to
borrow overnight at the CBLO.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Surge in food inflation continues to worry, benchmark closes at 8.16%
Government securities
Yields closed marginally higher as a sharp spike in the weekly food articles inflation
weighed in on the sentiment. Underlying sentiment continues to remain bearish
due to the uncertainty about the movement of the key policy rates due to the
inflationary pressures. In the week ended Jan 22, food articles inflation surged to
17.05% from 15.57% a week before. Primary articles inflation rose to a four week
high of 18.44% from 17.26% a week ago. A mild rate hike at the last policy meet
on 25th Jan and the surging inflation (despite active intervention) has created an
expectation that RBI will continue with its tightening cycle. OIS rates did not see
any easing despite the improvement in the liquidity due to the concerns of soaring
prices. One year and five year OIS closed at 7.41% and 8.03% respectively.
Non-SLR market
One year CD rates continued to remain at the 10% level with banks with raising
funds through issuance to fund the robust credit growth. Three month CDs traded
in the 9.60%-9.70% band in today’s trade. Syndicate Bank raised INR 10bn via
three month CD at 9.70%. Vijaya Bank and Canara Bank placed INR 6bn and INR
5bn of three month CD at 9.77% and 9.68% respectively. PNB raised one year CD
for a quantum of INR 3bn at 9.94% while IDBI Bank placed one year CD for INR
3bn at 9.95%.
Money markets
Government expenditure inflow at the beginning of the month has provided
significant respite to the system liquidity. LAF borrowing plunged to its lowest level
since Nov-10 to INR 466bn. Compared to an average borrowing of INR 1trn in the
last fortnight, banks have borrowed on average only INR 770bn this fortnight
mainly on account of the accelerated draw down of the government cash balances.
Overnight rates traded below the central bank’s lending rates with call rates
ending at 6.50% while the CBLO rates closing at 6.41%. The volumes at the CBLO
window continued to be robust at INR 686bn due to the banks preference to
borrow overnight at the CBLO.
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