Weekly inflation data provides support to yields, 10 Yr yield at 8.13% Government securities  Bonds continued their upwards movement today owing to the fall in the weekly food inflation which supported sentiment. The lull in supply after this week’s auction also ensured a firm appetite from investors. In the week ended Jan 29, food inflation declined to a seven week low of 13.07% compared to 17.05% a week ago. However IIP data tomorrow and WPI inflation data on Monday will be critical in the central bank’s policy stance going ahead. The 10-year bond closed 3bps lower at 8.13% while the 12-year bond ended at 8.20%, down 2bps from Wednesday’s close. Volumes also saw a sharp rise, clocking in INR 70bn compared to an average of INR 40bn through the fortnight. Non-SLR market  Yields on the corporate bond fell marginally today tracking the fall in the sovereign yields. 10 Year corporate bond were dealt 5bps lower at 9.15%-9.20% while three year bonds traded in the 9.40%-9.45% range. IDFC placed INR 1.50bn of 15 year bond at 9.35% (call option at the end of 10th year).  Bank mopped up INR 25bn through issuance of CDs today. Allahabad Bank placed INR 3bn of three month CD at 9.76% and INR 3.50bn of four month CD at 9.78%. SBBJ and SBM placed one year CD at 9.91% for a quantum of INR 1.50bn and INR 2.0bn respectively. Bank of Maharashtra placed INR 4.50bn of 11th April maturity CD at 9.60%. Money markets  LAF borrowing saw a sharp uptick to INR 898bn compared to INR 740bn on Wednesday since bank rushed to cover their CRR requirement towards the end of the reporting cycle. Banks maintained an average of 1% excess over the required CRR until 7th February unlike their conventional pattern of skewed borrowing in the fortnight. Call rates ended steady above the central bank lending rate at 6.58% while CBLO rates closed at 6.49%: Edelweiss

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Weekly inflation data provides support to yields, 10 Yr yield at 8.13%
Government securities
 Bonds continued their upwards movement today owing to the fall in the weekly
food inflation which supported sentiment. The lull in supply after this week’s
auction also ensured a firm appetite from investors. In the week ended Jan 29,
food inflation declined to a seven week low of 13.07% compared to 17.05% a
week ago. However IIP data tomorrow and WPI inflation data on Monday will be
critical in the central bank’s policy stance going ahead. The 10-year bond closed
3bps lower at 8.13% while the 12-year bond ended at 8.20%, down 2bps from
Wednesday’s close. Volumes also saw a sharp rise, clocking in INR 70bn compared
to an average of INR 40bn through the fortnight.

Non-SLR market
 Yields on the corporate bond fell marginally today tracking the fall in the sovereign
yields. 10 Year corporate bond were dealt 5bps lower at 9.15%-9.20% while three
year bonds traded in the 9.40%-9.45% range. IDFC placed INR 1.50bn of 15 year
bond at 9.35% (call option at the end of 10th year).
 Bank mopped up INR 25bn through issuance of CDs today. Allahabad Bank placed
INR 3bn of three month CD at 9.76% and INR 3.50bn of four month CD at 9.78%.
SBBJ and SBM placed one year CD at 9.91% for a quantum of INR 1.50bn and INR
2.0bn respectively. Bank of Maharashtra placed INR 4.50bn of 11th April maturity
CD at 9.60%.
Money markets
 LAF borrowing saw a sharp uptick to INR 898bn compared to INR 740bn on
Wednesday since bank rushed to cover their CRR requirement towards the end of
the reporting cycle. Banks maintained an average of 1% excess over the required
CRR until 7th February unlike their conventional pattern of skewed borrowing in the
fortnight. Call rates ended steady above the central bank lending rate at 6.58%
while CBLO rates closed at 6.49%.