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Informist, Monday, Oct. 14, 2024

By Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market were confined to a narrow range Monday as investors engaged in only requirement-based trading ahead of India's CPI data for September, dealers said. "Nothing seems affecting the market as of now, and the levels are more or less the same compared to Friday," a dealer at a mid-sized brokerage firm had said before the release of the data.

Market participants did not expect CPI inflation to be a major surprise. "See, most of the polls are saying the CPI will be around 5%, and the governor (Reserve Bank of India Governor Shaktikanta Das) also said that, so the market is not expecting any surprise," a fixed-income dealer at a mid-sized mutual fund house said. "Anything below 4.70% or above 5.20% will be a surprise."

India's CPI inflation, data for which was released after market hours by the National Statistical Office, rose to a nine-month high of 5.49% in September from 3.65% in August. According to an Informist poll, India's headline inflation was seen rising to 5.1% in September from 3.65% in August, due to an unfavourable base.

On Oct. 9, the RBI revised its CPI forecast for Jul-Sept to 4.1% from an earlier estimate of 4.4%. "Going forward, the moderation in headline inflation is expected to reverse in September and likely to remain elevated in the near term due to adverse base effects, among other factors," Das said at the conclusion of the Monetary Policy Committee's meeting last week. Inflation had fallen to 3.60% in July, coming in below RBI's medium-term target of 4% after a gap of nearly five years and rose marginally to 3.65% in August.

Lack of firm triggers ahead of CPI data resulted in low trade volume in the secondary market with deals aggregating to only INR 71.47 billion recorded on the National Stock Exchange and BSE combined, against INR 110.68 billion Friday. Monday, both banks and mutual funds were active trading shorter-tenure papers, dealers said. Few non-banking financial companies and insurance companies traded papers of longer maturities in the secondary market, they said. 

Papers issued by the National Bank For Agriculture And Rural Development, HDFC Bank, ICICI Bank, Bajaj Finance, Bank of Maharashtra, HDB Financial Services, and Hero Fincorp were traded the most on exchanges. 

Primary market activity remained dull Monday with only a few companies tapping it to raise funds. Tuesday, Mankind Pharma will tap the primary market to raise up to INR 50 billion through three bonds of different maturities. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 54.50 million were traded at a weighted average yield of 6.8500-6.9989%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 50 million of Uttar Pradesh's March 2025 bonds were traded at 6.8500%

* INR 2.50 million of Punjab's March 2028 bonds were traded at 6.9090%

* INR 2.00 million of Tamil Nadu's February 2030 bonds were traded at 6.9989%

BENCHMARK LEVELS FOR CORPORATE BONDS: 

Edited by Deepshikha Bhardwaj

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