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Informist, Tuesday, Nov. 12, 2024

By Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market ended steady Tuesday as India's CPI inflation for October failed to lend fresh direction to the market, dealers said. India's CPI inflation rose to a 14-month high of 6.21% in October from 5.49% in September, data released Tuesday by the National Statistical Office showed. "6.21% was a surprise, but it was not a compelling number to move the market," a dealer at a mid-sized brokerage firm said. "The market was expecting something in the range of 5.9%–6.1%, this came a bit higher, and the market was basically on the sidelines ahead of the data."

In a break from the past, the inflation data was released during market hours at 1600 IST on Tuesday. 

"Largely, some market participants were mentally prepared for a comparatively higher number. But if you ask, if this number is higher than a broader market expectation, yes it is," a dealer at a mid-sized private sector bank said. "But it is not a number that changes the outlook in which possibly the people are looking at rates, there is some sentiment to become cautious."

According to an Informist poll, the headline inflation rate was seen at 5.9% in October. This was the first time since August 2023 that headline inflation was above the upper band of the Reserve Bank of India's medium-term target range of 2-6%. This was also the second month in a row when CPI inflation was above the central bank's target of 4% after having come below it in July and August.

Dealers said the data may have an impact on the opening levels on corporate bonds in the secondary market on Wednesday. "There can be (an impact), not major. But there can be 1-1.5 basis points higher bids in the opening and the market will settle post that," the dealer at the private bank said. 

Ahead of the data, market activity improved Tuesday with deals aggregating to INR 104.30 billion recorded on the National Stock Exchange and BSE combined, compared with INR 62.22 billion on Monday. Banks and mutual funds were active on both the buying and selling sides, dealing in paper maturing in three to five years, dealers said. Papers issued by REC, HDFC Bank, LIC Housing Finance, National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, National Housing Bank, and India Infrastructure Finance Co., were traded the most on the bourses.

On the other hand, the primary market was dull on Tuesday with no major deals being recorded on Tuesday. Last week, Informist exclusively reported that National Housing Bank and Power Finance Corp. are in discussions with arrangers to raise funds through bonds this week. National Housing Bank invited bids on Thursday to raise up to INR 50 billion through unsecured bonds maturing on Nov. 17, 2034.

UDAY BONDS

No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Wednesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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