Weekly Market Review | srei

Weekly Market Review

May 16, 2014

Money Market 16-May-14 9-May-14
Call

7.50%

8.25%

CBLO 8.73% 8.13%
Mibor 8.11% 8.14%
LAF o/s Repo (Rs Cr) 20,891 20,923
Benchmark Securities 13-May-14
Security Closing price Previous price Closing yield (%) Previous yield (%)
91 DTB 97.82 97.85 8.84 8.80
364 DTB 91.86 91.99 8.86 8.87
07.28%  2019 93.98 93.79 8.78 8.82
08.19%  2020 96.74 96.70 8.93 8.94
08.12%   2020 94.98 94.80 8.90 8.94
08.79%   2021 96.87 96.60 8.91 8.95
07.16%   2023 88.51 88.89 9.05 9.03
08.83%   2023 100.29 100.17 8.78 8.80
09.15%  2024 101.00 100.90 9.00 9.02
08.20%   2025 94.00 94.00 9.05 9.05
08.24%   2027 93.78 93.67 9.07 9.08
08.28%   2027 93.93 93.63 9.07 9.08
09.20%   2030 101.50 101.52 9.02 9.02
08.32%   2032 93.48 93.60 9.05 9.04
08.33%  2036 93.30 93.25 9.03 9.04
08.30%   2042 101.95 101.95 9.04 9.04

Data with one day lag

Call money rate eased due to gilt redemption

The interbank call money rate moved in a downward trend during the week; the call rate eased to 7.50% on May 16 from 9% on May 9. At the start of the week, liquidity conditions had tightened due to excise and service tax payments over the weekend, lack of government spending, and payments towards gilts purchased at the weekly auction last week. However redemption of the 6.07%, 2014 gilt resulted in a turnaround in liquidity conditions. The RBI also pitched in by conducting a Rs 61,000 cr 14 day term repo auction to boost liquidity.

Gilt prices fell on caution ahead of election results

Government bond prices weakened during the week as initial optimism gave way to caution as the election results drew nearer; the yield on the benchmark 10 year bond rose from 8.75% on May 9 to 8.83% on May 16. CPI (combined) inflation data released during the week dented sentiment for gilts. Concerns about the heavy supply of gilts up for sale on May 16 weighed on bond prices. The RBI announced that it would sell gilts for a total notified amount of Rs 20,000 cr. intermittent profit booking also exerted downward pressure on prices. However an unexpected reduction in the WPI based inflation in April brought cheer to investors and cut some losses. Bonds also tracked the rise in equity share indices and the appreciation in the rupee in the run up to the election results during the week, pushing up prices. Intermittent value buying also helped limit some losses.

Top 5 Traded Securities

ZCYC curve nearly identical, except at the short end

ZCYC curve was nearly identical except for a slight drop in yields for papers at the short end of the curve, compared to last week.

ZCYC Curve

Source: NSE

AAA Corporate Bond Yields and Spread
  Yield Spread
  13-May 7-May 13-May 7-May
1 year 8.95 9.30 0.21 0.41
3 year 9.26 9.31 0.53 0.50
5 year 9.43 9.42 0.49 0.47
10 year 9.42 9.43 0.24 0.23

Data with one day lag

Government Borrowing Programme (Rs. Cr.)
Budgeted G-Sec Gross Borrowings for 2013-14 597000
Budgeted G-Sec Net Borrowings for 2012-13 457000
Budgeted Redemptions 140000
G-Sec Gross Borrowings till Date 120000
G-Sec Gross Borrowing Completed (%) 20.10%
Maturities till date 40751
Net G-Sec Borrowings till date 79249
364 Day T-Bill Gross Borrowings till date 24000
OMO Purchases till date 0
SDL auction till date 20271

Term of the week

Certificate of Deposit This is a short term negotiable debt instrument issued as a promissory note against funds or in dematerialized form. They are issued in denominations of Rs 1 lakh or multiples of Rs 1 lakh, and their maturity ranges from 7 days to 3 years depending on the type of issuer.

Saturday, May 17, 2014