Informist, Friday, Oct 20, 2023
By Subhana Shaikh
MUMBAI – Limited participation kept yields on corporate bonds steady in the secondary market today, dealers said. Domestic investors that were active engaged in only requirement-based trade.
Mutual funds were highly active as they were said to have been switching positions as part of their portfolio churning exercise, dealers said. Some insurance companies and a few banks were also active. However, most activity was restricted towards the short-end.
Overall, the trade volume remained subdued. Deals aggregating 65.59 bln rupees recorded on the National Stock Exchange and BSE combined. In the secondary market, none of the Ujwal DISCOM Assurance Yojana bonds were traded, according to data from the Reserve Bank of India's Negotiated Dealing System-Order Matching System.
"Participation has remained low because it has become difficult to predict where the market is headed now given US Treasury yields have touched 5%," a dealer with a brokerage firm said.
Bonds that exchanged hands on the bourses included REC, Andhra Pradesh State Beverages Corp, Power Finance Corp, National Bank for Agriculture and Rural Development, Navi Finserv, Tata Capital Financial Services, Uttar Pradesh Power Corp and Jorabat Shillong Expressway.
The continuous rise in US Treasury yields and crude oil prices has left domestic investors jittery, dealers said. Yield on the benchmark 10-year US Treasury note remained above the crucial level of 4.95%, while Brent crude for December delivery was also above the key $90-per-barrel mark.
"Market will take cues only from the war (Israel-Hamas) now and all eyes are basically on crude oil prices...only thing is that crude should not go over the roof because that will have an impact on the market as it will get inflation trajectory upwards from the current target," a fund manager at a mid-sized fund house said
On the domestic front, concerns over open market operation sales by the RBI have subsided. An official from the central bank said today that the RBI will announce open market operation sales only as and when required.
Investors were also cautious ahead of the minutes of the Monetary Policy Committee's October meeting. The minutes, released after market hours, showed that majority members of the RBI's rate-setting panel reiterated caution on persisting high inflation.
According to merchant bankers, a handful of state-owned entities and non-banking financial companies are likely to tap the primary market next week.
India Infrastructure Finance Co Ltd plans to raise up to 20 bln rupees through 15-year bonds, NIIF Infrastructure Finance Ltd aims to borrow up to 5 bln rupees through bonds maturing on Nov 28, 2028. Biddings from both bond offerings are scheduled on Monday.
Lendingkart Finance Ltd plans to raise 150 mln rupee through two-year bonds. The company has called bids for the issuance on Monday.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURES | TODAY | THURSDAY |
Three-year | 7.79-7.83% | 7.80-7.83% |
Five-year | 7.80-7.82% | 7.80-7.83% |
10-year | 7.70-7.75% | 7.71-7.76% |
End
Edited by Ashish Shirke
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