Rate cut expectations diminish on PM's economic advisory statements
n Sovereign yields distinctly hardened 20bps at market close today on stronger anticipation of absence of any rate cuts in Tuesday's monetary policy review. The 10-year benchmark yield, which opened 4bps gap-down, indicated a more severe volatility throughout the day; it traveled 30bps (high of 5.92%) with the conclusive trading sessions reporting a singular upside, and closed at 5.89%.
n The NDS-OM platform witnessed weak investor participation and some profit booking prior to the policy and the fanning of speculation of no rate action by the RBI as the PM's economic advisory panel suggested no further rate action for the policy. Total volumes were still lower at INR 73.50 bn, snapping below the INR 100 bn mark after a gap of 18 days.
n Liquidity in the system, as indicated by the overnight rates and net LAF borrowings, enhanced further since yesterday; the average overnight rate closed 4bps lower at 4.05%, while the total volumes picked up to INR 756.35 bn. Net borrowings under the LAF stood at (544.55) bn i.e. excess cash of same amount.
n Non-SLR market activity remained subdued with long-term rates hardening in response to higher sovereign yields. Power Finance Corporation's 10-year paper yield rose 13bps to close at 8.98%; its 5-year counterpart performed likewise to close at 8.80%. EPFOs emerged as formidable buyers in the bonds segment.
Highlights for the day
n Primary issuances under the CD segment sustained all volumes in the 6-months maturity (much like yesterday). Mutual funds were the dominant investors in view of SEBI's guidelines to limit all liquid fund investments in less than 182-day maturity.
n Public banks maintained investor interest in the government bond segment, purchasing stock worth INR 9.82 bn while foreign and private banks, Mutual Funds and Primary dealers together reporting offsetting sales of INR 11.3 bn.
No comments:
Post a Comment