Saturday, January 31, 2009

Bond market gets new benchmark paper

The 6.05% paper expiring in January 2019 will become the new benchmark for the bond market, starting Monday. The Reserve Bank of India (RBI) said on Friday it had set a cut-off yield of 6.05% at the auction of the new 10-year security maturing in 2019.

The 10-year security has traditionally been the most liquid paper in the Indian bond market and is widely used by traders to take a view on
interest rates. "There were aggressive bids that came in for the new bond," says RVS Shridhar, chief dealer with Axis Bank.

"Now, although there is a big difference of 25 bps between it and the old benchmark bond (which is now a 9-year paper), we expect this will adjust in coming days. While the new paper closed at the yield of 5.91%, the 8.24% paper due in April 2019 ended at 6.26%.

RBI's cut-off yield corresponds to a price of Rs 100, as the bond is being sold for the first time. The issue was fully subscribed. A Reuters poll earlier in the day had forecast the central bank selling the 2019 bondsat a cut-off of 6.06%. So, the auction as more or less on expected lines, said dealers.

Yields came off highs after the auction results on short-covering, as
investors who were not allotted bonds started buying them back in the secondary market, dealers said.

At the close, the 10-year bond had risen 92 bps this month after falling 254 bps in 2008. It fell to a record low of 4.86% earlier this month after a hefty rate cut by RBI.


The 6.05% paper will be under increasing spotlight in the coming days as analysts say higher government spending and a revenue shortfall due to an economic slowdown will strain government
finances, pushing up borrowing.of these extra bonds may keep the pressure on bond yields despite a series of aggressive rate cuts by the central bank, dealers say.

Friday, January 30, 2009

Investing Term of the Day - straddle


Term of the Day - straddle

For Friday, January 30, 2009


Term of the Day - straddle

The purchase or sale of an equal number of puts and calls, with the same strike price and expiration dates. A straddle provides the opportunity to profit from a prediction about the future volatility of the market. Long straddles are used to profit from high volatility. Long straddles can be effective when an investor is confident that a stock price will change dramatically, but cannot predict the direction of the move. Short straddles represent the opposite prediction, that a stock price will not change.


Friday's Featured Funny Definition - budget

A mathematical system designed to remind you that you can't afford the kind of living you've grown accustomed to.

Click here to enjoy the the hilarious renditions we found for a number of popular terms!


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Quote of the Day

My broker and I are working on a retirement plan. Unfortunately, it's his. - Anonymous


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Markets 4 U

Equity Market Update for - January 30, 2009

Equity Markets For The Day

The Sensex ended the day with a gain of 187.96 points, or 2.04% at 9,424.24. The broad-based NSE Nifty climbed 50.85 points, or 1.80% at 2,874.80

Top Gainer were JP Associates(10.86%),Hindalco(7.60%),DLF(6.73%),Maruti(5.54%),Rel Comm(5.40%)

Major losers were Sun Phrama(6.14%),BHEL(2.78%),Tata Motors(1.16%),Infosys(0.65%),NTPC(0.58%).

Overall market breadth was positive. Out of the total 2,503 stocks traded at BSE, 1,379 advanced, 1,014 declined while 110 remained unchanged.

The

 

 
INDEX CLOSE POINTS %CHANGE
NIFTY 2,874.80 +50.85 1.80%
SENSEX 9,424.24 +188.0 2.04%
 


                TOP 3 GAINERS (source: bseindia.com)

GAINERS LAST PRICE % GAIN
JP ASSOCIATES 77.10 10.86
HINDALCO 49.55 7.60
DLF 176.10 6.73
TOP 3 LOSERS
LOSERS LAST PRICE % LOSS
SUN PHARMA 1073.00 6.14
BHEL 1318.00 2.78
TATA MOTORS 148.80 1.16

 

 

 Debt Market Update for January 30, 2009

MIBOR

4.25%

 

FOREX

$ Rupee 48.87/48.88
1 year fwd 1.92%-1.96%

WPI INFLATION 

5.64%

Money market rates

  CD
30 days

5-5.5%

90 days

6.00-6.25%

1 year

7%-7.25%


 

G SEC YIELD

30 year (6.83% GOI 2039) 7.11%
9 year (8.24% GOI 2018) 6.17%
US 10 YR. yield 2.84%
   

NEXT AUCTION AS PER CALENDAR

Jan 30-GOI-5 yr-Rs.3000 cr; 30 yr -Rs.3000 cr; 10 yr -4000 cr

Last Auction

Jan 30-GOI-5 yr-Rs.3000 cr; 30 yr -Rs.3000 cr; 10 yr -4000 cr

TREASURY BILL AUCTION

TENOR SIZE DATE CUT OFF PREVIOUS CUT OFF
91 day 8000 cr 28-Jan 4.79% 21-Jan 4.67%
182 day 1500 cr 21-Jan 4.55% 07-Jan 4.64%
364 day 1000 cr 28-Jan 4.59% 14-Jan 4.51%

YIELD COMPARISON

SECURITY TODAY 1 D Ago 1 Wk Ago  1 Mt Ago 
  30-Jan 29-Jan 23-Jan 30-Dec
8.24% GOI 2018 6.14% 6.11% 5.72% 5.27%
7.99% GOI 2017 6.49% 6.38% 6.31% 5.60%
6.83% GOI 2039 7.11% 6.89% 6.91% -
CORPORATE  BOND MARKET

Market Behavior and sentiment for the day: Corporate bond market was range-bound, with lack-luster activity.

AAA BENCHMARKS / SPREADS
1Y 8.30 370
2Y 8.55 333
3Y 8.85 325
4Y 8.90 292
5Y 8.90 295
6Y 8.98 268
7Y 9.1 264
10Y 9.15 298
     
     
     

G-sec market comments: G-sec markets opened with negative bias ahead of auction  and weakened further on higher than expected auction cut-off yield and expectation of further additional G-Sec borrowings.

The benchmark G-Sec bonds (8.24% GOI 2018) yields closed at 6.14% as against the previous close of 6.11%, on higher auction cut-off. Yields touched intra-day high of 6.31%.

Liquidity was comfortable, with over night call money market rates touching intra-day low of 2%. The net RBI's LAF balance was positive at around Rs.56,460 cr.

Next week, the markets are expected to take cues from  inflation, domestic liquidity position and global economic data-points.

 


 

Contact Us / Sign up a friend :
Sources: NSE MIBOR, Top Gainers and Losers :- nse india.com.  Dollar/ Rupee Rate, Forward Premia, Repo amounts, Sensex / Nifty details, Tbill auction details, Auction details :- Reuters.  Gsec Benchmark and U.S. yields, Corporate yields :- Reuters, Bloomberg & RMF Team.  CP benchmark :- Bloomberg and RMF Fund Managers. FII flows :- sebi.gov.in
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Thursday, January 29, 2009

Investing Term of the Day: bid size


Term of the Day - bid size

For Thursday, January 29, 2009


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Term of the Day - bid size

The number of shares that are being offered for purchase at the bid price, often expressed in terms of hundreds of shares. Some traders try to use the bid size and ask size to measure impending short term upward or downward pressure on the stock's price. This can work for stocks on exchanges such as NYSE and AMEX, but is far less useful on Nasdaq, which has market makers ready to buy and sell shares, rather than specialists who balance books of buy and sell orders.


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Quote of the Day

Money, not morality, is the principle commerce of civilized nations. - Thomas Jefferson


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Markets 4 U

Equity Market Update for - January 29, 2009

Equity Markets For The Day

The Sensex ended the day with a loss of 21.19 points, or 0.23% at 9,236.28. The broad-based NSE Nifty fell 25.55 points, or 0.90% at 2,823.95.

Top Gainer were M&M(5.16%),JP Associates(4.46%),Maruti(4.32%),Tata Motors(3.58%), Hindalco(3.37%).

Major losers were DLF(8.72%),Airtel(4.75%),Wipro(3.56%),BHEL(3.06%),Rel Comm(2.64%).

Overall market breadth was negative. Out of the total 2,506 stocks traded at BSE, 1,152 advanced, 1,258 declined while 96 remained unchanged

The

 

 
INDEX CLOSE POINTS %CHANGE
NIFTY 2,823.95 -25.55 0.90%
SENSEX 9,236.28 -21.19 0.23%
 


                TOP 3 GAINERS (source: bseindia.com)

GAINERS LAST PRICE % GAIN
M&M 298.50 5.16
JP ASSOCIATES 69.15 4.46
MARUTI 543.00 4.32
TOP 3 LOSERS
LOSERS LAST PRICE % LOSS
DLF 162.20 8.72
AIRTEL 622.55 4.75
WIPRO 226.00 3.56

 

 

 Debt Market Update for January 29, 2009

MIBOR

4.21%

 

FOREX

$ Rupee 48.97/48.98
1 year fwd 1.87%-1.92%

WPI INFLATION 

5.64%

Money market rates

  CD
30 days

5-5.5%

90 days

6.25-6.5%

1 year

7%-7.25%


 

G SEC YIELD

30 year (6.83% GOI 2039) 6.89%
9 year (8.24% GOI 2018) 6.11%
US 10 YR. yield 2.68%
   

NEXT AUCTION AS PER CALENDAR

Jan 30-GOI-5 yr-Rs.3000 cr; 30 yr -Rs.3000 cr; 10 yr -4000 cr

Last Auction

Jan 16-GOI-5 yr-Rs. 4000 cr; 9 yr -Rs. 3000 cr, 30yr - Rs. 3000 cr

TREASURY BILL AUCTION

TENOR SIZE DATE CUT OFF PREVIOUS CUT OFF
91 day 8000 cr 28-Jan 4.79% 21-Jan 4.67%
182 day 1500 cr 21-Jan 4.55% 07-Jan 4.64%
364 day 1000 cr 28-Jan 4.59% 14-Jan 4.51%

YIELD COMPARISON

SECURITY TODAY 1 D Ago 1 Wk Ago  1 Mt Ago 
  29-Jan 28-Jan 22-Jan 29-Dec
8.24% GOI 2018 6.11% 6.04% 5.81% 5.55%
7.99% GOI 2017 6.38% 6.45% 6.34% 5.90%
6.83% GOI 2039 6.89% 7.07% 7.10% -
CORPORATE  BOND MARKET

Market Behavior and sentiment for the day: Corporate bond market was range-bound, with lack-luster activity.

AAA BENCHMARKS / SPREADS
1Y 8.00 353
2Y 8.50 329
3Y 8.70 310
4Y 8.70 294
5Y 8.80 289
6Y 9.01 267
7Y 8.95 259
10Y 9.05 301
     
     
     

G-sec market comments: G-sec markets rallied at the longer end of the curve. The cut-off of MSS repurchase auction security was at 4.29%.

The benchmark G-Sec bonds (8.24% GOI 2018) yields closed at 6.11% as against the previous close of 6.04%, on higher inflation numbers.

Liquidity was comfortable, with over night money market rates in 3.5%-4.5% range. The net RBI's LAF balance was positive at around Rs.61,505 cr.

This week, the markets is expected to take cues from G-sec auction cut-off, domestic liquidity position and global economic data-points.

 


 

Contact Us / Sign up a friend :
Sources: NSE MIBOR, Top Gainers and Losers :- nse india.com.  Dollar/ Rupee Rate, Forward Premia, Repo amounts, Sensex / Nifty details, Tbill auction details, Auction details :- Reuters.  Gsec Benchmark and U.S. yields, Corporate yields :- Reuters, Bloomberg & RMF Team.  CP benchmark :- Bloomberg and RMF Fund Managers. FII flows :- sebi.gov.in
Disclaimer and Unsubscription :
You are receiving this emailer because you are an investor of Reliance Mutual Fund, or you have subscribed to our other daily emailers. Your privacy is very important to us. Click here to Unsubscribe. Since India has no anti-spamming law, we follow the US directive passed in Bill.1618 Title III by the 105th US Congress, which states that mail cannot be considered spam if it contains contact information, and a remove mechanism (which this email does) . Copyright © 2002. All Rights Reserved to Reliance Mutual Fund. The views expressed in this newsletter are those of Reliance Mutual Fund (RMF) and not that of the stock market or  the financial markets. RMF makes no representation as to the quality, liquidity or market perception on the securities/issuer/borrower, nor does it provide any guarantee whatsoever. The risk arising out of the purchase/participation in any issue will rest fully with you without any form of recourse to Reliance Mutual Fund.

Wednesday, January 28, 2009

Edserv Soft / Gemini Engi-Fab IPO opening next week

1. Gemini Engi-Fab IPO opening on Feb 03

Incorporated in 1998, Gemini Engi-Fab Ltd is  Andheri, Mumbai based manufacturer of industrial fabrication related products for verity of industries.

Gemini Engi-Fab Limited is entering in the capital markets with an initial public offering, IPO of 55,00,000 Equity Shares for cash, at a premium to be decided through a 100% Book Built Issue.

The price band for the issue has been fixed at Rs 75/- at lower level and Rs 80/- at upper level for equity share of Rs 10/-. The issue opens on Feb 03, 2009, and closes for subscription on Feb 06, 2009. The equity shares of the company are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).



2. Edserv Softsystems Limited IPO opening on Feb 05

Incorporated in 2001, Edserv Softsystems Limited is in the business of web-learning, software development staffing solutions.

Edserv Softsystems Limited is entering in the capital markets with an initial public offering, IPO of 39, 73,908 Equity Shares for cash, at a premium to be decided through a 100% Book Built Issue.

The price band for the issue has been fixed at Rs 55/- at lower level and Rs 60/- at upper level for equity share of Rs 10/-. The issue opens on Feb 05, 2009, and closes for subscription on Feb 09, 2009. The equity shares of the company are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).



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Does L&T have a game plan for Satyam?

Morgan Stanley

 
The Backdrop:

L&T built up a 4% stake in Satyam in early January 2009, before the disclosure by Satyam's promoters that the accounts had been falsified. Post the disclosure, L&T did not purchase any shares until January 23, 2009, on which day, in two block deals, the company upped its stake to 12%. Given that Satyam is currently a black box with little clarity on its assets and liabilities, we (in line with the rest of the market) viewed the development with mounting concern. L&T's CMD, Mr. A.M. Naik, and CFO, Mr. Y.M. Deosthalee, got on a call with investors today to alleviate concerns and discuss the company's game plan on Satyam.
 
L&T's Game Plan for the First Stake Purchase:

The acquisition of the first 4% was done to help L&T Infotech (the IT services arm of the company) to compete with the top-tier companies in the IT services space. With the Satyam franchise (thought good at that time) available relatively cheap, and the promoters holding a low stake (8.6%), L&T management believed that the acquisition of a small stake would be enough to push through a strategic alliance between Satyam and L&T Infotech, allowing the companies to go to market together.
 
L&T's Rationale for the Stake Increase:

L&T's plan for Satyam has not really changed dramatically over the last few weeks. After waiting for around three weeks to get more clarity on Satyam's liabilities, L&T has increased its stake to 12%, based on the information it had available. The end game remains the same, with L&T looking for a strategic alliance between L&T Infotech and Satyam. L&T has also lowered its cost of acquisition from around Rs170 to around Rs80 / share. L&T believes that the increased stake gives it the leverage to influence thinking at the board level.


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