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Short covering, value buying help stem the free-fall of Gilts; LAF plunges
• Markets did not lose further ground at the open as yields were more or less at
yesterday’s level. In the absence of any major cues and ahead of an extended trading
break, short-covering led to trimming of positions and yields headed south.
• In addition, there were instances of value buying as yields are at attractive levels after the
recent fall and as the markets begin to factor in rate cuts at RBI’s upcoming policy meet.
• The 10-Y benchmark rallied 5 bps from yesterday’s level to end the session at 8.69%.
Overall G-Sec volumes also picked up after a series of below par activity sessions.
• The OIS market which was relatively insulated amidst yesterday’s panic had a strong
session today as swap rates came off by more than 5 bps across tenors. This is a likely
fallout of the easing liquidity trajectory and anticipation of RBI rate action. The 1Y OIS
closed at 7.98-8.04% vs 8.02-8.08% and the 5Y swap traded at 7.54-7.60% as against 7.60-
7.66%.
Non-SLR Market
ABFL placed April-End maturity CP worth INR 500mn @ 9.90%. Shriram Equipment Finance
Limited placed June maturity CP worth INR 250mn @ 10.40%. Sundaram Finance placed 1
month CP worth INR 500mn @ 9.80%.
Money Market
The liquidity situation has finally shown signs of moderating with the LAF borrowing coming
off to INR 838bn (across 2 windows combined) – this is largely on expected lines with yearend
strains easing away. The call rates also softened in tandem, with the 5-day borrowing
WAR settling at 9.24% vs 9.35%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Short covering, value buying help stem the free-fall of Gilts; LAF plunges
• Markets did not lose further ground at the open as yields were more or less at
yesterday’s level. In the absence of any major cues and ahead of an extended trading
break, short-covering led to trimming of positions and yields headed south.
• In addition, there were instances of value buying as yields are at attractive levels after the
recent fall and as the markets begin to factor in rate cuts at RBI’s upcoming policy meet.
• The 10-Y benchmark rallied 5 bps from yesterday’s level to end the session at 8.69%.
Overall G-Sec volumes also picked up after a series of below par activity sessions.
• The OIS market which was relatively insulated amidst yesterday’s panic had a strong
session today as swap rates came off by more than 5 bps across tenors. This is a likely
fallout of the easing liquidity trajectory and anticipation of RBI rate action. The 1Y OIS
closed at 7.98-8.04% vs 8.02-8.08% and the 5Y swap traded at 7.54-7.60% as against 7.60-
7.66%.
Non-SLR Market
ABFL placed April-End maturity CP worth INR 500mn @ 9.90%. Shriram Equipment Finance
Limited placed June maturity CP worth INR 250mn @ 10.40%. Sundaram Finance placed 1
month CP worth INR 500mn @ 9.80%.
Money Market
The liquidity situation has finally shown signs of moderating with the LAF borrowing coming
off to INR 838bn (across 2 windows combined) – this is largely on expected lines with yearend
strains easing away. The call rates also softened in tandem, with the 5-day borrowing
WAR settling at 9.24% vs 9.35%.
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