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Monday, January 30, 2023

India Gilts Review: End steady amid low volume on lack of triggers

Informist, Monday, Dec 26, 2022

 

By Anjali

 

MUMBAI – Government bond prices ended steady today amid low volume as traders kept to the sidelines due to lack of significant cues, dealers said.

 

The 10-year benchmark 7.26%, 2032 bond ended at 99.58 rupees, or 7.32% yield, against 99.59 rupees, or 7.32% yield on Friday. Throughout the day, the 10-year bond moved in a narrow range of 11 paise.

 

Market activity was so muted today that a trader at a state-owned bank was prompted to say “everyone is just waiting to go home.” “There are absolutely no triggers in the market,” the dealer said.

 

Foreign banks also kept to the sidelines in the last week of the calendar year as they prepared to wrap up their books of accounts, dealers said. 

 

Traders further avoided placing bets as they awaited fresh developments on COVID-19 restrictions across countries, dealers said. Moreover, the market ignored the government’s decision to provide free ration for one year.

 

“Nobody in the market is expecting the government to borrow for the food grain scheme,” a dealer at a private bank said. “The speculations before the market opened also died down afterwards.”

 

Food Minister Piyush Goyal said the Centre will bear the entire burden of providing free food grains to 813.5 mln poor people under the National Food Security Act. The total outgo for schemes under the National Food Security Act is estimated at 2 trln rupees.

 

Prices fell in the early trade tracking the rise in US Treasury yields and crude oil prices on Friday, dealers said.

 

US Treasury yields rose on the view that the US Federal Reserve will continue with rate hikes as data showed that personal income rose more than expected in November, while inflation data for October was revised upward.

 

The yield on the benchmark 10-year US Treasury note rose 8 basis points to 3.75% on Friday. A rise in US Treasury yields narrows the rate differential with domestic bonds, making the emerging market asset less attractive.

 

Crude oil prices rose after Russia said it could cut crude output in response to the Group of Seven countries’ decision to put a price cap on Russian exports. The Brent crude contract for March delivery was at $84.50 per barrel on Friday against $81.67 per bbl on Thursday.

 

US financial markets are shut today on account of Christmas and associated festivities.

 

Some dealers were of the view that the yield on the benchmark 10-year 7.26%, 2032 bond will remain in a range of 7.30-33% for upcoming two to three days as the year-end nears.

 

According to data on RBI’s Negotiated Dealing System – Order Matching platform, the turnover today was 100.95 bln rupees, compared with 232.50 bln rupees on Friday.

 

Meanwhile, trades aggregating 200 mln rupees were settled with the digital rupee pilot in three deals, compared with 150 mln rupees in three deals on Friday.

 

OUTLOOK

On Tuesday, bond prices are seen steady as traders may stay on the sidelines due to lack of significant domestic cues, dealers said.

 

Volumes are expected to be dull through the week as the year-end approaches, with foreign banks closing their books of accounts, dealers said.

Any significant movement in US Treasury yields and crude oil prices may lend cues at open.

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.29-7.35%.

 

 

Today

 Friday

Price

Yield

Price

Yield

7.26%, 2032

99.58007.3194%99.59007.3179%

7.38%, 2027

100.54757.2341%100.57007.2283%7.10%, 202998.92007.3138%98.96007.3056%7.54%, 2036100.85007.4375%100.90507.4310%6.54%, 203294.64007.3605%94.64007.3602%

India Gilts: In thin band on lack of significant cues; volume low

 

 1240 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)99.5899.5999.4899.4899.59YTM (%)      7.31987.31877.33417.33417.3179

 

India Gilts: In thin band on lack of significant cues; volume low

 

MUMBAI–1240 IST–Prices of government bonds remained in a thin band amid low volume as traders stayed on the sidelines due to lack of significant domestic cues, dealers said.

 

“It would take at least two days to reach 7.30% yield (on the 10-year bond),” a dealer at a primary dealership said. “If there are no negative triggers, there aren’t any positive triggers either.”

 

Foreign banks also remained on the sidelines as they close their books of accounts for this calendar year, contributing to the low trade volume, dealers said.

 

Prices fell in the early trade tracking the rise in US Treasury yields and crude oil prices, dealers said.

 

The yield on the benchmark 10-year US Treasury note was at 3.75% on Friday compared with 3.67% on Thursday. A rise in US Treasury yields narrows the rate differential with the domestic bonds, making the emerging market asset less attractive.

 

The Brent crude contract for March delivery rose on Friday to $84.50 per barrel, against $81.67 per bbl on Thursday.

 

US financial markets are shut on account of Christmas and associated festivities.

 

According to data on the RBI’s Negotiated Dealing System, Order Matching platform, the market-wide turnover was 61.55 bln rupees at 1225 IST, compared with 106.35 bln rupees at 1220 IST on Friday.

 

During the day, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.35%. (Nishat Anjum)

India Gilts: Tad down on rise in US ylds, crude prices; volume muted

 

 0935 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)99.5299.5899.4899.4899.59YTM (%)      7.32897.31907.33417.31907.3179

 

MUMBAI–0935 IST–Government bond prices were a tad down amid low volumes due to a rise in US Treasury yields and crude oil prices on Friday, dealers said. 

 

The benchmark 10-year US Treasury yield rose on the view that the US Federal Reserve will continue with rate hikes as personal income rose more than expected in November, while inflation data for October was revised upward.

 

The yield on the benchmark 10-year US Treasury note rose 8 basis points to 3.75% on Friday. A rise in US Treasury yields narrows the rate differential with domestic bonds, making the emerging market asset less attractive.

 

The Brent crude contract for March delivery was at $84.50 per barrel on Friday against $81.67 per bbl on Thursday.

 

Volumes were low today as traders stayed on the sidelines with the domestic market lacking cues, dealers said. Foreign banks, too, are away from the market as they close their books of accounts near the end of the year, dealers said.

 

Some dealers were of the view that the yield on the 10-year benchmark 7.26%, 2032 bond is likely to stay in a narrow range of 7.31-7.33% as the year-end nears.  

 

“The government’s decision on providing free ration will not affect the gilts market instantly as we have no confirmation that it will lead to increase in borrowing,” a dealer at a state-owned bank said.

 

The government has decided to provide free ration to 813.5 mln poor people under the National Food Security Act till December 2023.

 

According to data on the RBI’s Negotiated Dealing System, Order Matching platform, the market-wide turnover was 19.95 bln rupees at 0935 IST, compared with 28.80 bln rupees at 1005 IST on Friday.

 

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.36%. (Anjali)

India Gilts: Seen down tracking rise in US yields, crude prices Fri

 

MUMBAI – Government bond prices are seen opening lower today, tracking a rise in US Treasury yields and crude oil prices on Friday, dealers said.

 

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.30-7.36%, as against 7.32% on Friday.

 

The benchmark 10-year US Treasury yield rose on Friday as personal income rose more than expected in November while inflation data for October was revised upward, strengthening the view that the Fed will continue to hike rates.

 

The yield on the benchmark 10-year US Treasury note was at 3.75% Friday compared with 3.67% Thursday. A rise in US Treasury yields narrows the rate differential with the domestic bonds, making the emerging market asset less attractive.

 

Crude oil prices rose after Russia said it could cut crude output in response to the Group of seven countries’ decision to put a price cap on Russian exports.

 

Brent crude future for March delivery was at $84.50 per barrel on Friday against $81.67 per bbl on Thursday.

 

Domestically, some dealers are of the view that the government’s decision to provide free ration for one year may weigh on the gilt prices as the new expenses may affect the government’s finances and could force the Centre to borrow more.

 

Food Minister Piyush Goyal said the Centre will bear the entire burden of providing free food grains to 813.5 mln poor people under the National Food Security Act.

 

The total outgo for schemes under the National Food Security Act is estimated at 2 trln rupees.

 

Volume is expected to be muted during the week as the year-end nears, with foreign banks closing their books of accounts, dealers said. (Nishat Anjum)

 

 

End

 

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

 

Edited by Tanima Banerjee

 

 

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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Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

 

Source: Cogencis

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