Weekly Market Review | srei
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Weekly Market Review

June 3, 2016

Money Market 3-June-16 27-May-16
Call 6.20% 6.00%
CBLO 5.37% 5.64%
Mibor 6.41% 6.51%
LAF o/s Repo (Rs Cr) 3,185 6,552

Benchmark Securities 1-June-16
Security Closing price Previous price Closing yield (%) Previous yield (%)
91 DTB  98.33 98.32 6.83 6.84
364 DTB  93.65 93.51 6.93 6.96
08.12%  2020 102.51 102.63 7.46 7.43
08.08%  2022 102.28 102.35 7.61 7.59
7.16%  2022 97.45 97.58 7.64 7.61
07.68%  2023 100.41 100.54 7.61 7.58
07.72%  2025 100.33 100.41 7.67 7.66
07.59%  2026 100.69 100.85 7.49 7.46
08.15%  2026 102.72 102.84 7.77 7.75
08.28%  2027 103.65 103.74 7.79 7.78
07.59%  2029 99.05 99.32 7.71 7.67
07.88%  2030 100.87 101.04 7.77 7.75
09.20%  2030 111.03 111.19 7.90 7.88
07.73%  2034 99.42 99.57 7.79 7.77
08.30%  2040 104.15 104.13 7.91 7.91
08.13% 2045 103.02 103.10 7.86 7.86

Data with two day lag

Liquidity remained comfortable

The call money rate mostly remained below the repo rate as inflows from the government’s month-end spending and repo auctions kept demand for funds low. The RBI’s open market bond purchase operation on May 31 brought more funds into the system. In the auction, the central bank bought back securities for a notified Rs 15,000 crore. To keep the call rate from dipping too low, the banking regulator conducted reverse repo auctions in the last three sessions of the week. The borrowing rate settled at 6.20% on June 3 as against 6% on May 27.

Gilts ended slightly lower

Government bonds weakened slightly after trading in a narrow range through most of the week. The yield of the benchmark 7.59% 2026 paper settled at 7.49% on June 3 as against 7.47% on May 27. Trading activity remained subdued as participants avoided building heavy positions ahead of the release of US non-farm payrolls data and the US Federal Reserve’s (Fed’s) policy meet on June 14. Caution prevailed ahead of the RBI’s monetary policy announcement next week, amid speculation that incumbent central bank chief Raghuram Rajan may not continue in office for a second term. The rupee’s weakness intra-week dented sentiment further. In the weekly bond sale, the RBI auctioned the 7.68% 2023 paper, the 7.59% 2026 paper, the 7.73% 2034 paper, and the 8.13% 2045 paper for a total notified amount of Rs 15,000 crore.

Top 5 Traded Securities

ZCYC dipped at the short end

The latest week’s ZCYC dipped at the short end, indicating lower yields for shorter term papers, and largely retaining its shape compared to the previous week’s curve.

Plot of the Estimated ZCYC

Source: NSE

AAA Corporate Bond Yields and Spread
  Yield Spread
  1-June 25-May 1-June 25-May
1 year 7.68 7.67 0.76 0.75
3 year 7.88 7.88 0.53 0.51
5 year 8.11 8.08 0.62 0.60
10 year 8.20 8.20 0.59 0.60

Data with two day lag

Government Borrowing Programme (Rs. Cr.)
Budgeted G-Sec Gross Borrowings for 2013-14 600000
Budgeted G-Sec Net Borrowings for 2012-13 425181
Budgeted Redemptions 174,819
G-Sec Gross Borrowings till Date 105,000
G-Sec Gross Borrowing Completed (%) 12.50%
Maturities till date 49,614
Net G-Sec Borrowings till date 40,386
364 Day T-Bill Gross Borrowings till date 227000
OMO Purchases till date 55,014
SDL auction till date 32,605

Term of the week

Sovereign gold bond schemeIt is a scheme launched by the Centre as an alternate investment to holding physical gold. Investors will get returns based on the prevailing gold price. Since this is a bond, it can be held in demat or physical paper form.

Saturday, June 4, 2016