Weekly Market Review | srei
  • <none>

Weekly Market Review

July 25, 2014

Money Market 25-Jul-14 18-Jul-14
Call

8.50%

7.25%

CBLO 8.74% 8.14%
Mibor 8.90% 8.15%
LAF o/s Repo (Rs Cr) 17,235 20,605
Benchmark Securities 23-Jul-14
Security Closing price Previous price Closing yield (%) Previous yield (%)
91 DTB 97.91 97.91 8.57 8.56
364 DTB 92.04 92.22 8.67 8.63
07.28%  2019 95.30 94.80 8.48 8.60
08.19%  2020 96.27 95.72 8.63 8.75
08.12%   2020 97.73 97.16 8.59 8.71
08.79%   2021 98.25 97.68 8.66 8.76
07.16%   2023 90.55 90.00 8.71 8.81
08.83%   2023 101.05 100.65 8.66 8.72
09.15%  2024 96.20 95.80 8.74 8.79
08.20%   2025 97.15 96.45 8.72 8.82
08.24%   2027 96.75 96.30 8.70 8.76
08.28%   2027 100.44 99.85 8.54 8.62
09.20%   2030 104.70 103.85 8.65 8.75
08.32%   2032 96.95 96.22 8.66 8.74
08.33%  2036 96.85 95.95 8.65 8.75
08.30%   2042 106.00 105.00 8.66 8.75

Data with two day lag

Call money rate rose amid tight liquidity

Interbank call money rate rose to 8.20-8.50% on July 25 from 7.10-7.25% on July 18. Demand for funds rose as banks borrowed to meet daily and weekend reserve needs. In addition, outflows towards payment of gilts purchased in the weekly auction last week and the state development loan auction, in the absence of government spending, increased the liquidity deficit. The RBI held 3 term repo auctions this week, disbursing Rs 81,500 cr to keep a check on liquidity conditions.

Gilts rose in anticipation of FII rate hike and new 10 year paper

Government bond prices strengthened in anticipation of an increase in sub-limits for various categories of foreign portfolio investors (FPIs); the yield of the benchmark 8.83% 2023 paper fell to 8.67% on July 25 from 8.77% on July 18. Bond prices extended their gains after the RBI, noting that FPIs had fully utilised their gilt investment limits in the open category, increased the limit by $5 bn to $25 bn. Further, the regulator reduced the investment limit allocated to long-term FPIs from $10 bn to $5 bn. The overall investment limit after the reshuffle remained unchanged at $30 bn. Sentiment for gilts was also supported by anticipation of a new 10-year paper this week. The RBI set a coupon rate of 8.40% for the newly auctioned 10-year bond that matures in 2024. Intermittent profit sales, however, prevented further gains. Sentiment was also hit after the government simply announced tax relief for a short period for debt mutual funds, but refused to reduce the rate on long term capital gains tax to 10%.

Top 5 Traded Securities

ZCYC curve shifted downwards

ZCYC curve shifted downwards, indicating lower yields for papers across all maturities.

ZCYC Curve

Source: NSE

AAA Corporate Bond Yields and Spread
  Yield Spread
  23-Jul 16-Jul 23-Jul 16-Jul
1 year 8.91 9.00 0.18 0.27
3 year 9.22 9.32 0.71 0.75
5 year 9.28 9.35 0.60 0.61
10 year 9.21 9.29 0.31 0.34

Data with two 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 256000
G-Sec Gross Borrowing Completed (%) 42.88%
Maturities till date 75113
Net G-Sec Borrowings till date 180887
364 Day T-Bill Gross Borrowings till date 54000
OMO Purchases till date 0
SDL auction till date 59946

Term of the week

Amortizing loanA type of loan that involves periodic repayment of principal along with interest. Home loans are usually structured as amortizing loans.

Saturday, July 26, 2014