Foreigners’ appetite for local debt waned after Donald Trump’s election win stoked speculation of higher US inflation and pushed up the dollar, given the President-elect’s plans to impose tariffs around the globe.
Earlier today, the MPC left key repo rate unchanged at 6.5 percent for the seventh time in a row, in line with the market expectations, with its focus firmly on bringing inflation down.
The outstanding amount on the current benchmark bond, as of January 29, stood at Rs 1.85 lakh crore, much beyond the limit of Rs 1.5 lakh crore, as per RBI data.
The 10-year benchmark bond opened trading at a yield of 7.3211 percent against the previous day’s close of 7.35 percent.
The average yield on sovereign debt maturing in 10 years or more has fallen below that of securities due in one-to-three years
"We now believe that there is a very good chance that JPM will announce the index inclusion of India's bond market in mid-September," strategists Min Dai and Madan Reddy said in a note.
There is very little floating stock in the current 10-year paper
A list of important headlines from across news agencies that could help in your trade today.
"Most likely the government may miss its fiscal deficit target for the year on account of lower indirect tax collections (on account of reducing the GST rate from 28 percent to 18 percent on several items and lower dividend from RBI," says Abhishek Goenka, Founder and CEO of IFA Global
Bhaskar Panda of HDFC Bank is of the view that as far as Indian 10-year benchmark yield is concerned, the recent downward trend may continue.
Favourable economic scenario makes products like income, dynamic and gilt funds a reasonable bet once again.
Nagarajan recommends investors to look at short term bond funds for investments at this point and time.
Vivek Rajpal, rates strategist at Nomura India says, there is likely to be additional OMO of Rs 30000 crore this fiscal
With USD 70-80 billion net long rupee positions having built over the last few months, it makes a strong case for volatility and vulnerability, feels Ananth Narayan of Standard Chartered Bank.
The 10-year bond yields continue to trade in 7.8-8 percent range awaiting the upcoming inflation numbers for further cues, says Ashutosh Raina of HDFC Bank.
The 10-year 8.4 percent 2024 bond traded at life high of Rs 103.18, up 0.11 percent compared to Friday's closing value.
According to him, with absence of near-term cues, bonds are expected to trade in a range. "There is an auction of inflation-linked bonds today
"For the past few days, the market has been reacting with a fear after listening to RBI governor I would say it is positioning itself with a view of no rate cut now," Manish Wadhawan of HSBC told CNBC-TV18.
Buoyed by the low inflation numbers and hopes of rate cut, experts see the yield of new 10-year bonds to be auctioned on Friday trading at 6.75-7.30 percent over next one year.
Reliance Industries may price as early as Thursday a USD 1 billion 10-year bond that will be used to fund capital expenditure in its US shale gas business, two sources with direct knowledge of the deal said.
The European Union is racing to draft a second bailout package for Greece to release vital loans next month and avert the risk of the euro zone country defaulting, EU officials said on Monday.
Systemic liquidity is improving as government spending comes into the system, says Sandeep Bagla, ICICI Securities Primary Dealership.
Markets have remained dull and we expect them to continue to remain dull. However, the LAF numbers released yesterday have shown some improvement in the liquidity situation overall which could bring in some buying interest. The 10-year bond is likely to trade around 8.15%, says RVS Sridhar, Axis Bank.