Weekly Market Review | srei
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Weekly Market Review

April 10, 2015

Money Market 8-Apr-15 31-Mar-15  
Call

8.05%

9.00

 
CBLO 7.45% 9.26%  
Mibor 7.47% N.A.  
LAF o/s Repo (Rs Cr) 5,588 21,371  

Benchmark Securities 25-Mar-15
Security Closing price Previous price Closing yield (%) Previous yield (%)
91 DTB  98.08 97.99 7.85 8.22
364 DTB  92.77 92.79 7.86 7.95
08.27%  2020 101.94 101.97 7.80 7.80
08.12%  2020 101.25 101.19 7.84 7.85
08.35%  2022 102.55 102.56 7.87 7.87
07.16%  2023 95.80 95.90 7.87 7.85
08.83%  2023 105.89 106.06 7.87 7.85
08.40%  2024 103.99 104.10 7.79 7.77
08.33%  2026 103.17 103.62 7.90 7.84
08.15%  2026 102.76 103.07 7.78 7.74
08.28%  2027 103.36 103.33 7.85 7.86
08.60%  2028 106.58 106.66 7.79 7.78
09.20%  2030 111.45 111.39 7.90 7.91
08.24%  2033 104.05 104.20 7.82 7.81
08.30%  2040 104.64 104.58 7.87 7.88
09.23%  2043 104.75 104.41 7.84 7.79

Data with two day lag

Demand for funds remained low

Liquidity conditions remained comfortable through most of the week. The call money rate rose intermittently as banks borrowed to meet their daily funding requirements. The overnight borrowing rate settled at 8.05% on April 10 as against 9% on March 31. The RBI conducted overnight and term reverse repo auctions through the week, permitting banks to park funds. In addition, the apex bank held its scheduled 14-day term repo auctions, disbursing funds worth Rs 31,000 cr.

Gilts fell following the RBI’s policy statement

Government bonds fell as sentiment for gilts weakened following the RBI’s monetary policy announcement. The benchmark 10-year 8.40% 2024 paper ended at 7.80% yield on April 10 as against 7.74% on March 31. Bonds started the week brightly as weak US non-farm payrolls allayed fears of a US interest rate hike in the near future. Bonds fell sharply on April 7 as the RBI’s monetary policy review failed to give the bond market clues about the timing of the next interest rate reduction. Apprehension about the fresh supply of gilts up for auction in the first weekly bond sale of the financial year kept gilts under pressure. Global crude oil prices, which rose intra-week, also provided negative cues to gilts. Prices received some support towards the end of the week after credit rating agency Moody’s upgraded India’s credit rating outlook from stable to positive. Increase in FII trading activity was witnessed after SEBI permitted FIIs to sell government bonds without losing their investment limits, provided they reinvested on the same day.

Top 5 Traded Securities

ZCYC curve tapered upwards at both ends

ZCYC curve tapered upwards at both ends of the curve. Yields for short term papers were however still lower than last week. Yields for long term papers were higher compared to last week.

Plot of the Estimated ZCYC

Source: NSE

AAA Corporate Bond Yields and Spread
  Yield Spread
  8-Apr 25-Mar 8-Apr 25-Mar
1 year 8.45 8.70 0.44 0.54
3 year 8.02 8.29 0.10 0.34
5 year 8.35 8.37 0.37 0.40
10 year 8.32 8.34 0.33 0.37

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 456405
Budgeted Redemptions 143595
G-Sec Gross Borrowings till Date 16000
G-Sec Gross Borrowing Completed (%) 2.67%
Maturities till date 0
Net G-Sec Borrowings till date 16000
364 Day T-Bill Gross Borrowings till date 0
OMO Purchases till date 6000
SDL auction till date 0

Term of the week

Guarantor A person who offers a guarantee to pay for another person’s debt if the person defaults on the payment. Banks may ask people with poor credit scores to find a guarantor before availing of loans.

Saturday, April 11, 2015