Informist, Monday, Aug 14, 2023
By Subhana Shaikh
NEW DELHI – Supply of commercial papers slipped today amid a truncated week as companies and financial institutions remained on the sidelines ahead of the release of CPI inflation data for July, scheduled after market hours today, dealers said.
So far today, companies and financial institutions raised 7 bln rupees through CPs, against 26.5 bln rupees on Friday. HDFC Securities was the top issuer, raising 5 bln rupees through CPs maturing in three months at 7.40%. Axis Finance and ICICI Securities raised 1 bln rupees each through CPs maturing in three months at 7.46% and 7.38%, respectively.
Data released after market hours showed that CPI inflation in India rose to a 15-month high of 7.44% in July. An Informist poll of 26 economists has estimated the CPI print at 6.5%.
“Sentiment is already quite bad in the market right now with issuers not willing to raise money and investors not willing to participate because of the incremental CRR done by the RBI. Expectations are that higher CPI number will further dampen the mood,” a dealer at a mid-sized brokerage firm said.
The muted supply is on account of a truncated week and as rates on short-term money markets rose substantially after the Reserve Bank of India announced an incremental cash reserve ratio of 10% on all scheduled banks, sucking out surplus liquidity.
Liquidity in the banking system was estimated to be in a surplus of 1.84 trln rupees today, compared with 2.64 trln rupees on Friday.
Money markets will be shut on Tuesday and Wednesday on account of Independence Day and Parsi New Year, respectively.
Rates on three-month commercial papers issued by non-banking financial companies were quoted at 7.20-7.40%, and rates on papers of manufacturing companies were at 7.10-7.30%.
Rates on three-month certificates of deposit were quoted at 7.00-7.20%. No bank issued certificate of deposits today.
–Primary market
* Axis Finance, ICICI Securities and HDFC Securities raised funds through CPs.
–Secondary market
* Punjab National Bank’s CD maturing on Aug 17 was dealt four times at a weighted average yield of 6.9023%
* Utratech Cement’s CP maturing on Sep 4 was dealt once at a weighted average yield of 6.9505%
At 1720 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:
NOTE: Details of the deals have been received from market sources.
End
Edited by Avishek Dutta
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