India Corporate Bonds
Ylds steady, US CPI data awaited for rate cues
This story was originally published at 20:38 IST on 14 August 2024
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds ended steady today as most traders stayed on the sidelines ahead of the US retail inflation print for July, which was due after market hours today. The crucial data point was awaited for cues on the pace of likely rate cuts in the world's largest economy.
Market participants expected minimal impact from the US inflation numbers on the Indian corporate debt market, but they still preferred to remain cautious until the data was out of the way, dealers said.
Some sections of the market believed a weaker-than-expected US inflation reading would spur a decline in yields on US Treasury notes due to rising chances of a 50-basis-point rate cut by the US Federal Reserve next month. This in turn could drag down domestic bond yields, dealers said.
"See, everybody is sitting in wait-and-watch mode as of now, until the US CPI data is released. We know it is not likely to have much impact on the secondary market bond yields, but people are looking forward to the data," a fund manager at a mid-sized mutual fund house said. "It's not necessary that the market has to move every day, most likely it will remain still until something newsworthy happens to move the market."
Data released after market hours showed that the US CPI rose 0.2% in July after falling 0.1% in June. According to a Dow Jones poll, the headline CPI was expected to have risen 0.2% on-month in July. On an annual basis, inflation in the US slowed for the fourth consecutive month to 2.9% in the previous month, the lowest since March 2021, compared to 3% in June and below forecasts of 3%.
In the last US Federal Open Market Committee meeting in July, policymakers kept interest rates unchanged. But US Federal Reserve Chair Jerome Powell said that a rate cut was discussed at the meeting, and the committee indicated it was looking at risks to both jobs and inflation.
Domestic financial markets are shut on Thursday for Independence Day. Today, overall deals aggregating to 79.11 bln rupees were recorded on the National Stock Exchange and BSE combined, compared with 108.53 bln rupees on Tuesday.
Papers issued by Earlysalary Services, National Bank for Agriculture and Rural Development, HDFC Bank, Hella Infra Market, Krazybee Services, Adani Airport Holdings, Andhra Pradesh State Beverages Corp, Whizdm Finance, LIC Housing Finance, Cholamandalam Investment and Finance Co, Power Finance Corp, Bajaj Finance, Navi Finserv, Uttar Pradesh Power Corp, Spandana Sphoorty Financial, UGRO Capital, Shriram Finance, Kerala Infrastructure Investment Fund, Kerala Financial Corp were traded the most on the bourses.
In the secondary market, while most market participants stayed on the sidelines, only mutual funds and banks were said to have been active in requirement-based trading, they said. Mostly, banks were said to be active on the selling side, while mutual funds were active on buying side.
In primary market, JM Financial raised 3 bln rupees through four bonds of different maturities. The bonds were fully subscribed. All the bonds carry a fixed coupon of 9.00%. "This is a short week, that's why we are not seeing much activity in the primary market. Despite that, yesterday we saw NABARD was there to raise funds," a fund manager at a mid-sized mutual fund house said.
On Friday, Manappuram Finance will seek bids to raise 6 bln rupees through bonds maturing on Aug 19, 2026.
UDAY BONDS
None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | TUESDAY |
Three-year | 7.59-7.61% | 7.58-7.59% |
Five-year | 7.52-7.53% | 7.53-7.54% |
10-year | 7.41%-7.42% | 7.42-7.43% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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