India Corporate Bonds
Lack of firm cues keeps yields steady
This story was originally published at 20:39 IST on 23 September 2024
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By Sachi Pandey
MUMBAI – The activity in the fixed-income market continued to be dull as investors refrained from taking large bets due to the absence of major domestic triggers, dealers said. The yields on corporate bonds remained steady, largely in tandem with the movements in the government bond market, they said.
"Last week, the corporate bond market rallied along with G-Sec (government securities), but today it has mostly been flat. There are no fresh triggers and triggers driven by the FOMC (Federal Open Market Committee) and everything is now past us. Now we will look at the upcoming MPC (monetary policy committee) meeting, and the US unemployment data for further cues," portfolio manager of fixed income markets at a large sized mutual fund house said.
Last week, the US Federal Open Market Committee cut the federal funds target range by 50 basis points to 4.75-5.00%. However, market participants do not expect the Reserve Bank of India to cut the repo rate at its next Monetary Policy Committee meeting in October. "October meet will be mostly status quo, but the forward guidance by RBI will be looked at," the portfolio manager quoted above said.
The next monetary policy meeting of the RBI is scheduled Oct 7-9.
In the secondary market of corporate bonds, only a few banks and mutual funds were active trading papers today, dealers said. "Most of the activity was in the short-term for cash management. People are not very comfortable trading longer-tenure papers as of now," a dealer at a mid-sized brokerage firm said.
Trade volumes in the secondary market were higher today with deals worth 148.3 bln rupees recorded on the National Stock Exchange and BSE combined at 1800 IST against 115.8 bln rupees on Friday.
Papers issued by the REC, HDFC Bank, State Bank of India, LIC Housing Finance, India Infradebt, Kotak Mahindra Prime, and National Bank for Agriculture and Rural Development were traded the most today.
Some market participants also remained on the sidelines ahead of fresh primary market supply lined up for sale this week. Small Industries Development Bank of India, also known as SIDBI, has invited bids on Tuesday to raise up to 80 bln rupees through bonds maturing on Feb 26, 2029. Market participants expect the coupon to range at 7.40-7.45% for the issuance.
Today, Housing and Urban Development Corp raised 20 bln rupees through bonds maturing in 10 years at a coupon of 7.15%. The issue was fully subscribed.
UDAY BONDS
None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market today, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | FRIDAY |
Three-year | 7.53-7.56% | 7.54-7.56% |
Five-year | 7.39-7.41% | 7.39-7.41% |
10-year | 7.27-7.31% | 7.28-7.31% |
End
Edited by Akul Nishant Akhoury
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