Bonds yeild flat, traded in a small range
Bonds traded in a very small range on Monday, with the benchmark 10-year bond ending the day at a yield of 5.61% on Monday, almost flat from Friday's close.
By ET Bureau |
MUMBAI: Bonds traded in a very small range on Monday, with the benchmark 10-year bond ending the day at a yield of 5.61% on Monday, almost flat from Friday's close. Dealers said bonds gave up all the early morning's gains that arose on speculation the RBI may cut interest rates next week.
"G-Sec yields seem to be bogged down by the exta borrowings announced the government," says Ramkumar K, head of fixed income at Sundaram BnP Paribas Mutual. "Around Rs 20,000 crore worth bonds are going to hit the market in the coming two weeks and that is quite a short span," he said. He expects the 10-year to trade in a short range of 5.40 to 5.60%, but says the mood is largely bullish.
After a brief lull, activity in the corporate bond market is picking up fast. Bank of Baroda is expected to sell perpetual bonds worth Rs 200 crores on Tuesday. Nuclear Power Corporation of India is also looking to sell about Rs 1500 crore worth of bonds
However many banks have held back plans to raise funds on a higher-than-expected government borrowing schedule. Bank of India, Oriental Bank of Commerce Central Bank of India and UCO Bank are expected to sell bonds in the coming weeks. IIFCL sold its first tranche of bonds, an issue that is expected to extend beyond Monday.
The rupee too trimmed some of its early gains, despite a flat BSE sensex (up 5 points to end at 9330). It ended at 48.65 against the dollar, off a high of 48.50, but still 14 paise higher than Friday's close. However the non-deliverable-forwards are quoting at 48.77, indicating a bearish outlook.
Overnight call money rates rose on Monday as banks secured funds for their reserve requirements in the first week of the reporting cycle. But dealers said there is no liquidity concern as of now as a cut in CRR, that took effect on Saturday, had released about Rs 20,000 crores into the system and will offset the outflows totalling Rs 10,000 crores against Friday's bond auctions. RBI will sell Rs 9500 crore of treasury bills on Wednesday.
"G-Sec yields seem to be bogged down by the exta borrowings announced the government," says Ramkumar K, head of fixed income at Sundaram BnP Paribas Mutual. "Around Rs 20,000 crore worth bonds are going to hit the market in the coming two weeks and that is quite a short span," he said. He expects the 10-year to trade in a short range of 5.40 to 5.60%, but says the mood is largely bullish.
After a brief lull, activity in the corporate bond market is picking up fast. Bank of Baroda is expected to sell perpetual bonds worth Rs 200 crores on Tuesday. Nuclear Power Corporation of India is also looking to sell about Rs 1500 crore worth of bonds
However many banks have held back plans to raise funds on a higher-than-expected government borrowing schedule. Bank of India, Oriental Bank of Commerce Central Bank of India and UCO Bank are expected to sell bonds in the coming weeks. IIFCL sold its first tranche of bonds, an issue that is expected to extend beyond Monday.
The rupee too trimmed some of its early gains, despite a flat BSE sensex (up 5 points to end at 9330). It ended at 48.65 against the dollar, off a high of 48.50, but still 14 paise higher than Friday's close. However the non-deliverable-forwards are quoting at 48.77, indicating a bearish outlook.
Overnight call money rates rose on Monday as banks secured funds for their reserve requirements in the first week of the reporting cycle. But dealers said there is no liquidity concern as of now as a cut in CRR, that took effect on Saturday, had released about Rs 20,000 crores into the system and will offset the outflows totalling Rs 10,000 crores against Friday's bond auctions. RBI will sell Rs 9500 crore of treasury bills on Wednesday.
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