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Monday, January 30, 2023

India Gilts Review: End tad up on firm demand at state loan auction

Informist, Tuesday, Dec 27, 2022

 

By Kasthuri Akhil

 

MUMBAI – Prices of government bonds ended slightly higher today as investor demand was firm at the state loan auction, dealers said. Gains were limited as traders avoided placing large bets with the market lacking significant cues. 

 

The 10-year benchmark 7.26%, 2032 bond ended at 99.66 rupees, or 7.31% yield, against 99.58 rupees, or 7.32% yield on Monday. Today, the 10-year bond moved in a narrow range of 10 paise.

 

Prices rose after the release of the state bond auction result where the yields on the 10-year bonds were set in the range of 7.60-7.63%, against the market’s expectations of 7.63%-7.65% according to an Informist poll.

 

A total of 13 states raised 231.47 bln rupees through the sale of bonds at the auction.

 

“The auction result prompted some buying in the bond market which has been the prime reason for the rise in gilts towards the end of trade,” a dealer at a private bank said.

 

The bidding process at the auction was disrupted by a technical glitch in the E-Kuber system that led to the extension of the bidding time in two phases till 1215 IST. The technical issue was eventually fixed after 1150 IST, dealers said.

 

In early trade, gilts were up tracking a fall in US Treasury yields. However, the gains were limited due to a rise in crude oil prices, dealers said.

 

The yield on the benchmark 10-year US Treasury note tumbled down 2 basis points to 3.73% in early Asian trade from Friday’s settlement but recovered later in the day to 3.75%.

 

“Crude, US yields all of them are immaterial to market right now,” a dealer at a state-owned bank said. “When it’s a holiday, its holiday. Enjoy the chill before the volatility coming in the next month.”

 

The Brent crude contract for March delivery was at $84.95 per barrel compared with $84.50 per bbl on Friday. Crude oil was not traded on Monday as US and other financial markets were shut on account of Christmas and other festivities.

 

Trade volume remained dull through the day as traders kept to the sidelines on lack of any other significant triggers in the domestic market. As is usually the case, foreign banks also contributed to low volume as they close their books of accounts and stay on the sidelines near year-end.

 

Traders also avoided placing large bets as they await the release of the state loan auction calendar for Jan-Mar by the end of this week, which typically has the highest quantum of state borrowing, dealers said.

 

According to data on the RBI’s Negotiated Dealing System – Order Matching platform, the turnover today was 135.00 bln rupees, compared with 100.95 bln rupees on Monday.

 

Meanwhile, trades aggregating 950 mln rupees were settled with the digital rupee pilot in 15 deals, compared with 200 mln rupees in three deals on Monday.

 

OUTLOOK

On Wednesday, bond prices are seen steady as traders may stay on the sidelines due to lack of significant domestic cues, 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 7.27-7.35%.

 

 

Today

 Monday

Price

Yield

Price

Yield

7.26%, 2032

99.66007.3077%99.58007.3194%

7.38%, 2027

100.61007.2174%100.54757.2341%7.10%, 202998.95007.3078%98.92007.3138%7.54%, 2036100.87007.4351%100.85007.4375%6.54%, 203294.70757.3500%94.64007.3605%

 

India Gilts: Slightly up after robust investor demand for state bonds

 

 1330 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)99.6599.6899.5899.5899.58YTM (%)      7.30997.30447.31947.31947.3194

 

MUMBAI–1415 IST–Government bond prices rose slightly after robust investor demand at the state loan auction, but the gains were limited as the market lacked other significant cues, dealers said.

 

“The demand at the auction was strong as traders bid aggressively,” a dealer at a primary dealership said. “Since there were no other factors in the market, gilt prices did not rise much.”

 

A total of 13 states looked to raise 231.47 bln rupees through the sale of bonds at the auction. The Reserve Bank of India set cut-off yields on the states’ 10-year bonds at 7.60-7.63%, compared with 7.63-7.65% estimated in a poll of 11 dealers by Informist.

 

Dealers had expected firm demand at higher yields for the bonds lined up in the state loan auction, though others were cautious of stocking up on state bonds as supply was higher than the previous auctions this month, dealers said.

 

Moreover, the market looked ahead to the release of the state loan auction calendar for Jan-Mar by the end of this week, which typically has the highest quantum of state borrowing, dealers said.

 

The E-Kuber system faced a technical glitch during bidding for the auction, as banks were getting automatically logged out from the system, dealers said. The bidding time was extended in two increments till 1215 IST, and the glitch was fixed for most market participants after 1150 IST, they said.

 

Prices rose a tad in early trade, tracking a fall in US Treasury yields in Asian trade, but the effect of overseas cues had faded, dealers said. 

 

According to data on the RBI’s Negotiated Dealing System, Order Matching platform, the market-wide turnover was 77.90 bln rupees at 1330 IST, compared with 61.55 bln rupees at 1225 IST on Monday.

 

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.27-7.35%. (Anjali)

India Gilts: Rise on fall in US yields, mkt eyes state loan auction

 

 0938 IST  PRICE HIGH  PRICE LOW       OPEN    PREVIOUS7.26%, 2032PRICE (rupees)99.6699.6899.5899.5899.58YTM (%)      7.30847.30447.31947.31947.3194

 

MUMBAI—-0938 IST—-Prices of government bonds rose today tracking a fall in US Treasury yields, dealers said. The yield on the benchmark 10-year US Treasury note was 2 basis points down at 3.73% in Asian trade from Friday’s settlement. 

 

A rise in crude oil prices limited the gains in gilts, dealers said.

 

The Brent crude contract for March delivery was at $84.95 per barrel compared with $84.50 per bbl on Friday. Crude oil was not traded on Monday as US and other financial markets were shut on account of Christmas and other festivities.

 

Crude oil prices rose on concerns due to winter storms that have hit the US at unprecedented levels, affecting logistics and production of petroleum products. 

 

Trade volume was low as traders avoided placing large bets ahead of the auction of state government securities later today, dealers said. Absence of foreign banks from the bond market owing to the year-end also contributed to the low volume, dealers said.

 

Today, 13 states are looking to raise 231.47 bln rupees through the sale of bonds from 1030 IST to 1130 IST.

 

“We see firm demand from investors at the SDL (State Development Loans) auction,” a dealer at a private bank said. “However, traders might keep away as they will await state loan auction calendar for next quarter, which is generally heavy.”

 

Reserve Bank of India will release the state loan auction calendar for Jan-Mar by the end of this week.

 

According to data on the RBI’s Negotiated Dealing System, Order Matching platform, the market-wide turnover was 19.85 bln rupees at 0930 IST, compared with 19.95 bln rupees at 0935 IST on Monday.

 

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.28-7.33%. (Kasthuri Akhil)

India Gilts: Seen steady; rise in crude may offset fall in US yields

 

MUMBAI – Government bond prices are seen opening steady today as traders may keep to the sidelines, with the domestic market lacking significant cues, dealers said.

 

Today, the yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.29-7.35%, as against 7.32% on Monday.

 

A rise in crude oil prices may be offset by a fall in US Treasury yields, dealers said. The Brent crude contract for March delivery was at $84.72 per barrel in early trade, compared with $84.50 per bbl on Friday. 

 

Crude oil prices rose in early trade today due to concerns that winter storms across the US are affecting logistics and production of petroleum products.

 

The yield on the benchmark 10-year US Treasury note was at 3.73% against 3.75% on Friday. US financial markets were closed on Monday due to Christmas and associated festivities.

 

Traders may avoid placing large bets ahead of the state loan auction, where 13 states are looking to raise 231.47 bln rupees through the sale of bonds, dealers said.

 

Volume may remain low due to absence of foreign banks as they close their books of account for the calendar year, dealers said. (Nishat Anjum)

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 [email protected]

 

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

 

Source: Cogencis

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