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Liquidity eases surprisingly; Gilts display lack of confidence, give up gains
Gilts opened up today and should have continued in the same vein as the LAF borrowing
plunged surprisingly. However, the direction was reversed in the second half with yields
giving up initial gains. This guarded sentiment has been carried forward from the past
week, which is also characterized by trading volumes remaining subdued around the INR
80bn mark on an average.
The 8.79% 2021 bond ended at 8.23% vs 8.22%, touching an intra-day high of 8.20%. This
precautious mood is expected to sustain itself until next week where we have multiple
events lined up, which will influence the yields from thereon.
The near end of the OIS curve too failed to cheer the reduced liquidity stress as swap
rates inched higher. The tail end headed lower, in line with global risk aversion trends.
The 1Y OIS traded at 8.13-8.19% vs 8.11-8.18% while the 5-Y swap was at 7.37-7.43% vs
7.39-7.46%.
Non-SLR Market
Corporation Bank placed 3M CD worth INR 3.5bn @ 10.88%. Vijaya Bank placed same tenor
for INR 13bn @ 10.93%. OBC placed 1Y CD worth INR 5bn @ 10.55%.
Money Market
The surprise ease in liquidity had a calming effect on the call market with overnight
borrowing rates and volumes coming off significantly - the WAR for the day retraced well
below the 9% mark to end at 8.89% vs 9.10% seen on Friday. If the LAF borrowing remains
at these levels, call rates can be expected to correct further.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Liquidity eases surprisingly; Gilts display lack of confidence, give up gains
Gilts opened up today and should have continued in the same vein as the LAF borrowing
plunged surprisingly. However, the direction was reversed in the second half with yields
giving up initial gains. This guarded sentiment has been carried forward from the past
week, which is also characterized by trading volumes remaining subdued around the INR
80bn mark on an average.
The 8.79% 2021 bond ended at 8.23% vs 8.22%, touching an intra-day high of 8.20%. This
precautious mood is expected to sustain itself until next week where we have multiple
events lined up, which will influence the yields from thereon.
The near end of the OIS curve too failed to cheer the reduced liquidity stress as swap
rates inched higher. The tail end headed lower, in line with global risk aversion trends.
The 1Y OIS traded at 8.13-8.19% vs 8.11-8.18% while the 5-Y swap was at 7.37-7.43% vs
7.39-7.46%.
Non-SLR Market
Corporation Bank placed 3M CD worth INR 3.5bn @ 10.88%. Vijaya Bank placed same tenor
for INR 13bn @ 10.93%. OBC placed 1Y CD worth INR 5bn @ 10.55%.
Money Market
The surprise ease in liquidity had a calming effect on the call market with overnight
borrowing rates and volumes coming off significantly - the WAR for the day retraced well
below the 9% mark to end at 8.89% vs 9.10% seen on Friday. If the LAF borrowing remains
at these levels, call rates can be expected to correct further.
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