Informist, Monday, Jun 12, 2023
By Parth Singh
NEW DELHI – Yields on corporate bonds ended steady across tenures in the secondary market today as investors refrained from placing large bets due to caution ahead of India’s CPI data for May, due after market hours, dealers said.
Only mutual fund houses were active in the secondary market for requirement-based trading, dealers said.
“Now that we are done with MPC (Monetary Policy Committee’s decision), market will now rely on both domestic and US inflation data for cues. Unless something unexpected happens, including the FOMC decision, yields will most likely be rangebound this week,” a debt dealer at a private brokerage said.
Data released after market hours showed India’s CPI inflation moderated to a 25-month low of 4.25% in May from 4.7% in April. Core CPI inflation, which excludes food and fuel, declined to a three-year low of 5.0% in May from 5.2% in April.
An Informist poll, had pegged the headline inflation rate at 4.4% in May.
On Thursday, the Monetary Policy Committee’s decision to keep the repo rate unchanged at 6.5% was in line with market expectations. However, the Reserve Bank of India’s increased caution on inflation suggested that rate cuts may not be on the table this calendar year, which is said to have upset investors.
Market participants have now turned their focus on the US Federal Open Market Committee, which is similarly expected to keep the benchmark rate unchanged at its policy meeting scheduled over Tue-Wed, dealers said.
In the primary market, Housing Development Finance Corp Ltd raised 131.87 bln rupees through bonds maturing in 10 years at a coupon of 7.75%. Insurance companies were said to be major buyers.
“HDFC is yet to meet its total borrowing target through bonds before the merger (with HDFC Bank). So, there is still window for them to tap the market again,” a primary debt dealer said.
So far in the current financial year, HDFC has raised 460.62 bln rupees through six bond issuances. Late in March, the lender’s board had approved borrowing up to 570 bln rupees through bonds.
According to merchant bankers, some state-owned entities are set to tap the market with big-ticket offerings this week.
Bonds issued by HDFC, Larsen and Toubro, LIC Housing Finance, Power Finance Corp, National Bank for Agriculture and Rural Development, and Kotak Mahindra Prime were traded the most across tenures.
Volume in the market remained lacklustre. Today, deals aggregating 53.42 bln rupees were recorded on the National Stock Exchange and BSE combined as against 44.35 bln rupees on Friday.
UDAY BONDS
In the secondary market, none of the Ujwal DISCOM Assurance Yojana bonds were traded, according to data from the RBI’s Negotiated Dealing System-Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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