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Informist, Monday, Nov. 11, 2024

By Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market ended steady Monday as investors avoided major bets in the absence of fresh cues on the domestic front, dealers said. "The market was quite lacklustre, the volume was also lower compared to the previous day... there is no event as such and people have already invested accordingly," a dealer at a mid-sized mutual fund house said.
 

Trade volumes in the secondary market fell Monday, with deals aggregating to just INR 62.22 billion recorded on the National Stock Exchange and BSE combined, compared with INR 113.81 billion Friday. Banks and mutual funds were active on both the buying and selling sides, dealing in paper maturing in shorter tenures, dealers said. Paper issued by LIC Housing Finance, Power Finance Corp., Axis Bank, National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, and Kerala Infrastructure Investment Fund Board were traded the most on the bourses.

According to market participants, India's CPI inflation print for October will be in line with market expectations and may fail to lend fresh triggers to the market. "We expect the CPI to be close to 6%... it is known to the market, so there is no fresh buying or positions being taken," the dealer said.  

According to the median of 20 economists polled by Informist, headline consumer inflation is seen at a 14-month high of 5.9% in October, above the RBI's target of 4% and just below the upper end of the target range of 2-6%. The data will be released at 1600 IST Tuesday.

Market participants said higher inflation may influence the Reserve Bank of India's Monetary Policy Committee to keep the policy repo rate unchanged at 6.50% in December. "Some sections of the market expected a rate cut in December, but with an expectation of high inflation data, the chances are now seen low," a dealer at a mid-sized brokerage firm said. "The RBI is likely to defer it to February."

In the primary market of corporate bonds on Monday, Indian Railway Finance Corp. raised INR 14.15 billion through bonds maturing in 15 years at a coupon of 7.15%. IRFC initially planned to raise INR 30 billion, with a base issue size of INR 5 billion and a greenshoe option of INR 25 billion. "They did not accept the full amount as they did not want to set higher levels... it was higher than the expectation," the mutual fund dealer quoted above said.

Kalpataru Projects International also tapped the bond market Monday and raised INR 2 billion through unsecured bonds maturing in three years at a fixed coupon of 8.32%.

On Thursday, Informist exclusively reported that Power Finance Corp. and National Housing Bank are in discussions with arrangers to raise funds through bonds this week. Indian Oil Corp. is also expected to raise funds through corporate bonds before the end of December, sources told Informist.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Saji George Titus

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