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Monday, December 5, 2022

India Gilts Review: Jump tracking surge in rupee, fall in US yields

Informist, Monday, Nov 7, 2022

 

By Nishat Anjum

MUMBAI – Prices of government bonds ended higher today, tracking a sharp appreciation in the rupee against the dollar and a drop in US Treasury yields, dealers said.

 

The rupee closed at 81.92 per dollar today, its highest closing level since Oct 6, against 82.44 on Friday as banks sold dollars for exporters.

 

The 10-year benchmark 7.26%, 2032 bond closed at 98.79 rupees, or 7.43% yield, against 98.55 rupees, or 7.47% yield, on Friday.

 

Bonds saw firm investor demand at lucrative levels, with the yield on the 10-year benchmark 7.26%, 2032 bond above the key 7.45% mark, which further aided the rise in gilt prices, dealers said. 

 

Long-term bonds outperformed their short-term peers today as investors, particularly pension funds, stocked up on gilts, dealers said. Investors were also present at the weekly gilt auction on Friday, where cut-off prices of long-term bonds were set higher than expected.

 

“Towards the end of trade, the 10-year US Treasury yields softened to 4.13%, which also led to the rise in gilt prices, along with the rise in rupee today,” said a dealer at a state-owned bank.

 

Bonds traded in a thin range with low volume today, as traders stayed on the sidelines amid a truncated week, dealers said. Indian financial markets will be closed on Tuesday on account of Guru Nanak Jayanti.

 

According to data on RBI’s Negotiated Dealing System – Order Matching platform, the market-wide turnover was at 204.00 bln rupees, compared with 217.50 bln rupees on Friday.

 

“As the US yields came down near the end of our trade, traders covered their short bets, which led to a further rise in prices,” a dealer at a private bank said. “Nobody would want to leave open positions when it is a holiday tomorrow.”

 

Gilt volumes have remained low this month and yields have stayed in a thin band amid lack of cues in the domestic market. 

 

So far this month, the yield on the 10-year benchmark bond, 7.26%, 2032 has remained between 7.38% and 7.50%. In October, the yield had hit a high of 7.54%.

 

Informist exclusively reported today, citing a finance ministry official, that the government is not unduly worried about the rise in bond yields since last month, and is prepared for some more increase in the cost of borrowing as long as it is in line with policy rate hikes by the Reserve Bank of India.

 

“Maybe another 50 basis points of rate hikes will push us to 7.60-7.65% at most (on the 10-year benchmark yield),” the official told Informist. “But, the good thing is, that at least nobody is talking about 8%, like in the first half, that is more or less settled.”

 

Meanwhile, 5.30 bln rupees of trade was settled with the pilot digital rupee in 69 deals today, against 3.85 bln rupees in 57 deals on Friday. The RBI launched its pilot for the digital currency in the wholesale segment on Tuesday, with banks trading government bonds in the secondary market through the digital rupee.

 

OUTLOOK

Money markets will be shut on Tuesday on account of Guru Nanak Jayanti.

 

On Wednesday, gilt prices are seen opening steady as traders may keep to the sidelines with the domestic market lacking cues, dealers said.

 

Traders may watch out from any sharp movement in the US Treasury yields and crude oil prices at open.

 

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.39-7.47%.

 

 

Today

Friday

Price

Yield

Price

Yield

7.26%, 2032

 98.7875

 7.4342%

 98.5500

 7.4691%

7.38%, 2027

 99.9600

 7.3873%

 99.8300

 7.4210%

7.10%, 2029

 98.2000

 7.4556%

 98.0400

 7.4876%

7.54%, 2036 99.9800 7.5418% 99.6950 7.5757%6.54%, 2032 93.8800 7.4703% 93.6825 7.5012%

India Gilts: Remain up as rupee appreciates; investor demand firm

 

 1430 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)98.6698.8098.6398.6498.55YTM (%)      7.45297.43317.45707.45627.4691

 

MUMBAI–1430 IST–Prices of government bonds remained higher today as the rupee sharply appreciated against the dollar, dealers said.

 

The rupee was at 82.15 per dollar as against 82.44 on Friday.

 

“The market is primarily tracking the rupee movement as there is lack of any other significant cues,” a dealer at state-owned bank said.

 

Firm investor demand at lucrative levels, with the 10-year benchmark 7.26%, 2032 bond yield above 7.45%, also aided the rise in gilt prices, dealers said. 

 

In the weekly auction held on Friday, long-term bonds saw firm demand leading short-sellers to cover their bets in the secondary market, dealers said.

 

“The demand right now is just from insurance companies and pension funds,” a dealer at a primary dealership said. “With market just reacting to US yields right now, I expect the volume to stay dull till the US CPI data this week.”

 

For the rest of the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.42-7.47%. (Nishat Anjum)

India Gilts: Rise as investors stock up on gilts at lucrative levels

 

 1005 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)98.6498.7798.6398.6498.55YTM (%)      7.45557.43687.45707.45627.4691

 

MUMBAI–1005 IST–Prices of government bonds rose as investors stepped up purchases at yields considered lucrative, with the 10-year benchmark 7.26%, 2032 bond yield above the 7.45% mark, dealers said.

 

“The good cutoffs at auction on Friday translated to some demand in early trade today,” a dealer at a private bank said. “The movement is in a very narrow band and I don’t think there will be a sharp movement throughout the day.”

 

The rise in rupee against the dollar today also aided gilt prices, dealers said. The rupee rose sharply against the greenback as the dollar tumbled on Friday after mixed cues from the latest US jobs report, dealers said.

 

Volume was low in early trade as traders are keeping to the sidelines with no significant factors at play, domestic or foreign, dealers said.

 

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.42-7.47%.  (Kasthuri Akhil and Shubham Rana)

India Gilts: Seen steady; traders may keep to sideline on lack of cues

 

NEW DELHI – Prices of the government bonds are expected to open steady today as on lack of significant cues in the market, dealers said.

 

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.43-7.51% as against 7.47% on Friday.

 

Traders may stay on the sidelines with no firm factors at play, domestic or foreign, which could keep volume low, dealers said.

 

Investors may step up purchases at levels considered lucrative, following the firm demand at the weekly auction on Friday, dealers said.

 

The rise in crude oil prices on Friday could weigh on domestic gilt prices, dealers said.

 

The Brent crude oil contract for January delivery jumped to $98.57 a barrel on Friday from $94.67 per bbl on Thursday because of the upcoming ban on Russian oil by the European Union.

 

Traders await the release of the US CPI data this week to gauge the Federal Reserve’s actions at its next policy meeting in December.  (Anjali and Shubham Rana)

 

End

 

US$1 = 81.92 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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.

 

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Source: Cogencis

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