May 09, 2016
  • Money Markets:
  • The week ending on 06th May 16, witnessed  an average  overnight net liquidity deficit under LAF at Rs.7,469 cr as compared to previous week’s average liquidity deficit of Rs.3,938 cr. The daily average MSF borrowing stood at Rs.623 cr.
  • Money market rates hardened during the week; with call rates ending at 6.25% as against 6.00% in the previous week. The CBLO rates ended at 6.40%, from previous week’s 5.40%.
  • During the week, RBI injected total Rs.36,979 cr through term repos, whereas the RBI did not conduct any reverse repos.
  • G-Sec Market:
  • RBI conducted weekly auction for securities 7.35% GS 2024, New 14-yr Security, 7.73% GS 2034 and 8.13% GS 2045 for a total notified amount of Rs.15,000 cr. The cut-offs for the securities came in at 7.60%, 7.61%, 7.76% and 7.86% respectively. All the four securities were fully subscribed. The bid-cover ratio stood at 3.19 as compared to 3.42 in the previous auction.
  • The new benchmark 10-yr security 7.59% GS 2026  closed at 7.44%, unchanged w-o-w. The G-sec market witnessed a flat range-bound start to the week. The G-sec prices remained supported due to some correction in the global crude prices however the trading remained side-ways and the volumes remained lower. Mid-week some weakness was seen in the G-sec market as the T-bill auction cut-offs were on the weaker side which caused the 91-d T-bill yields to spike. But the weekly G-sec auction cut-offs were on the positive side especially the new 14-yr security. The market participants however refrained from initiating fresh trading positions ahead of the crucial US jobs data.
  • The OIS curve traded flat during the week. The 5-yr OIS closed at 6.67%, 3 bps lower from previous week levels; while the 1-yr OIS closed at 6.67%; unchanged from previous week levels. The 1 – 5 yr spread narrowed by 3 bps to end at 0 bps levels.
  • RBI plans to conduct OMO auctions worth Rs.15,000 cr in five Government of India dated securities on 10th May 2016.
  • Corporate Bonds
  • The corporate bond market witnessed a sell-off in short-dated papers. The 10-yr AAA bond traded at a yield of 8.27%, 2 bps higher from previous week levels of 8.25%. The yield on 1-yr AAA bond ended at 8.55%, 75 bps higher from previous week levels of 7.80%.
  • The major corporate debt issuances during the week were: Dewan Housing Finance issued 9.40% 10-yr debt paper to raise Rs.500 cr. Great Eastern Shipping issued 8.70% 10-yr debt paper to raise Rs.250 cr. LIC Housing Finance issued 8.37% 5-yr debt paper to raise Rs.250 cr. NTPC issued 8.05% 10-yr bond to raise Rs.1,000 cr. Apollo Tyres issued 8.65% 10-yr amortized debt paper to raise Rs.325 cr.
  • India’s first sovereign bond ETF named ‘MCB India ETF’ was launched in Mauritius. The ETF plans to invest in most liquid Government of India Securities ranging from 8yr - 13yr maturities.
  • Macro Indicators
  • India Core IIP growth comprising of 8 key industries   stood at 6.40% in Mar 2016. This was the fastest growth in last 16 months.
  • India’s Nikkei/Markit Manufacturing PMI dropped to a 4-month low at 50.5 in Apr 2016 from 52.4 in Mar 2016.
  • RBI released discussion paper on margin requirements for non-centrally cleared derivatives seeking comments/ feedbacks.
  • RBI has permitted all institutional entities regulated by RBI, SEBI, IRDAI, PFRDA or NHB to trade in interest rate swaps (IRS) on electronic platform. Earlier only scheduled banks were permitted to trade IRS electronically.
  • RBI released the draft guidelines for ‘on tap’ licensing of universal banks in private sector.
  • RBI eased the regulations on foreign exchange deposits, allowing foreign diplomatic missions and personnel and their family to freely open a rupee or foreign currency account. RBI also eased the restrictions for a person resident outside India to open an NRO (Non Resident Ordinary) rupee account in form of savings, current, recurring or fixed deposit.
  • India CPI inflation stood at 4.83% in Mar 2016. Whereas the WPI inflation stood at -0.85% in Mar 2016.
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