Informist, Wednesday, Dec 7, 2022
By Vishal Sangani
MUMBAI – Rates on short-term debt papers such as commercial papers and certificates of deposit increased today as the Reserve Bank of India's Monetary Policy Committee retained the 'withdrawal of accommodation' policy stance and said that inflation will remain above the target of 4% for the next 12 months, dealers said.
The Reserve Bank of India's Monetary Policy Committee today hiked the policy repo rate by 35 basis points. The repo rate now stands at 6.25%, marking the total increase in the key policy rate to 225 bps since May.
The MPC's decision is in line with expectations, and is the smallest rate hike in the current policy tightening cycle that began with a 40 bps action in May, followed by three increases of 50 bps each.
In an Informist poll, 21 of the 30 respondents said they expected the rate-setting panel to hike the repo rate by 35 bps.
Rates on three-month CPs issued by non-banking finance companies were 7.25-7.45%, up from 7.15-7.35% on Tuesday, while rates on papers of manufacturing companies increased to 7.00-7.20% compare with 6.90-7.10% on the pervious closing.
Rates on three-month CDs were at 6.90-7.15% up from 6.80-7.05% on Tuesday.
"The policy was a tad hawkish as the governor has pointed out that core inflation remains sticky and is still high for comfort. He further indicated that the MPC's mandate is to bring inflation back to 4% range. There was also no indication that tightening is coming to an end." said Avnish Jain, head of fixed income at Canara Robeco Asset Management Co.
"This indicates that the MPC is data driven and may have chosen not to provide any forward guidance in the current volatile global situation. Hence, at 25 bps rate hike in February is still in play, as the US Fed hikes are likely to be there in Jan-Mar." Jain said.
The RBI also raised the CPI inflation forecast for the rest of the financial year ending March. For Oct-Dec and Jan-Mar, the RBI raised its retail inflation forecast by 10 basis points to 6.6% and 5.9%, respectively.
"The message around liquidity was more hawkish than what the market was pricing, and we expect to see neutral liquidity in the banking system than surplus liquidity." said Ashhish Vaidya, head of treasury and markets, DBS Bank India.
Meanwhile, no CPs were issued today in the primary market due to low market participation. Both issuers and investors remained cautious on the outcome of the Monetary Policy Committee meeting, dealers said.
Market participants also remained on the sidelines to gauge the impact of the policy decision on short-term debt rates, dealers said.
On Tuesday, CPs worth 77.25 bln rupees were issued.
Banks did not issue any certificates of deposit today as there is no immediate need for funds.
On Tuesday, CDs worth 30.00 bln rupees were issued.
--Secondary market
* Axis Bank's CD maturing on Dec 6 was dealt three times at a weighted average yield of 7.6750%
* Hindustan Petroleum Corp's CP maturing on Jan 27 was dealt two times at a weighted average yield of 6.7999%
At 1530 IST, following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:
Certificates of deposit | Commercial papers | ||
Today | Previous | Today | Previous |
| 19.00 | 27.75 | 11.75 | 13.22 |
NOTE: Details of the deals have been received from market sources.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2022. All rights reserved.
Informist, Wednesday, Dec 7, 2022
By Vishal Sangani
MUMBAI – Rates on short-term debt papers such as commercial papers and certificates of deposit increased today as the Reserve Bank of India's Monetary Policy Committee retained the 'withdrawal of accommodation' policy stance and said that inflation will remain above the target of 4% for the next 12 months, dealers said.
The Reserve Bank of India's Monetary Policy Committee today hiked the policy repo rate by 35 basis points. The repo rate now stands at 6.25%, marking the total increase in the key policy rate to 225 bps since May.
The MPC's decision is in line with expectations, and is the smallest rate hike in the current policy tightening cycle that began with a 40 bps action in May, followed by three increases of 50 bps each.
In an Informist poll, 21 of the 30 respondents said they expected the rate-setting panel to hike the repo rate by 35 bps.
Rates on three-month CPs issued by non-banking finance companies were 7.25-7.45%, up from 7.15-7.35% on Tuesday, while rates on papers of manufacturing companies increased to 7.00-7.20% compare with 6.90-7.10% on the pervious closing.
Rates on three-month CDs were at 6.90-7.15% up from 6.80-7.05% on Tuesday.
"The policy was a tad hawkish as the governor has pointed out that core inflation remains sticky and is still high for comfort. He further indicated that the MPC's mandate is to bring inflation back to 4% range. There was also no indication that tightening is coming to an end." said Avnish Jain, head of fixed income at Canara Robeco Asset Management Co.
"This indicates that the MPC is data driven and may have chosen not to provide any forward guidance in the current volatile global situation. Hence, at 25 bps rate hike in February is still in play, as the US Fed hikes are likely to be there in Jan-Mar." Jain said.
The RBI also raised the CPI inflation forecast for the rest of the financial year ending March. For Oct-Dec and Jan-Mar, the RBI raised its retail inflation forecast by 10 basis points to 6.6% and 5.9%, respectively.
"The message around liquidity was more hawkish than what the market was pricing, and we expect to see neutral liquidity in the banking system than surplus liquidity." said Ashhish Vaidya, head of treasury and markets, DBS Bank India.
Meanwhile, no CPs were issued today in the primary market due to low market participation. Both issuers and investors remained cautious on the outcome of the Monetary Policy Committee meeting, dealers said.
Market participants also remained on the sidelines to gauge the impact of the policy decision on short-term debt rates, dealers said.
On Tuesday, CPs worth 77.25 bln rupees were issued.
Banks did not issue any certificates of deposit today as there is no immediate need for funds.
On Tuesday, CDs worth 30.00 bln rupees were issued.
--Secondary market
* Axis Bank's CD maturing on Dec 6 was dealt three times at a weighted average yield of 7.6750%
* Hindustan Petroleum Corp's CP maturing on Jan 27 was dealt two times at a weighted average yield of 6.7999%
At 1530 IST, following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:
Certificates of deposit | Commercial papers | ||
Today | Previous | Today | Previous |
| 19.00 | 27.75 | 11.75 | 13.22 |
NOTE: Details of the deals have been received from market sources.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2022. All rights reserved.
