The fall in g-sec yields is understandable because investors are assuming further rate cuts. However, one can still not be sure if these cuts will deliver higher investment when the broader economic environment is not yet conducive.
The attractive valuation spreads over GSecs and favorable demand-supply dynamics should keep Corporate bonds attractive. Also, given the lack of catalysts to shift the yield curve downwards, the long end should likely be volatile despite being attractively valued.
The time has come to further open up India’s bond markets to foreign investors
Why has the Indian yield curve steepened?
The challenge for policymakers will be to make sure that deleveraging happens in an orderly fashion.
The introduction of tap issue public bonds is being mooted at a time when the bond market in India is roiled by conflicting regulatory decisions
The regulator’s move to give a fillip to India’s nascent corporate bonds market, stems from a Budget proposal earlier this year. By operationalising the Budget announcement, the quantum of future borrowings by large corporates from the banking sector will gradually wean off.
Forcing firms to mandatorily switch their borrowings is neither advisable nor sustainable without any thought given to who would buy this fresh supply
On Budget day, India sought to expand its bond market beyond the traditional ambit of sovereign debt.
Fiscal slippage worries will come to the fore if the GST revenue collections do not hit the Rs 1 lakh crore mark by FY19, said Badrinivas NC of Citi India.
According to the Budget, gross borrowing via gilts is pegged at Rs 6.05 lakh crore and Rs 4.62 lakh crore on a net basis in 2018-19.
"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
Government bonds (G-Secs) slipped on selling pressure from banks and corporates and the Interbank call rates also finished lower due to lack of demand from borrowing banks.
The scramble for bonds came after some traders on Friday shorted the 6.97 percent bond due in 2026 and needed to secure the bonds on Monday to settle their trades.
The 10-year benchmark yield is likely to trade in a range of 6.67-6.72 percent today, says Ajay Manglunia of Edelweiss.
When the central government goes around with a hat in hand, it is usually questionable whether it can negotiate, much less, secure cheaper loans.
The amount raised through Initial Public Offers, Follow- on Public Offers, Offer For Sale and Qualified Institutional Placement was Rs 48,991 crore last fiscal.
For retail investors intending to purchase bonds in lot size of say few lakh rupees, when there is no primary issue available or the primary issue is not matching up to the risk-return profile expected, one should go for purchases in the secondary market.
In an unusual occurrence bond markets reacted very slowly to the central bank‘s credit policy move of keeping interest rate stable.
With the impact of demonetisation still being felt inflation under control, the six-member Monetary Policy Committee will likely recommend a reduction of 25 basis points in key policy rate, feel economists.
Every year, bond market participants want the government to cut the fiscal deficit, which will lead to lower borrowing and hence lower interest rates. This year, too, the bond market wants the government to cut the fiscal deficit to 3.0 percent of GDP from the current year‘s 3.5 percent of GDP.
Financial markets have been pricing in more economic growth since Donald Trump's U.S. election win last week, but U.S. protectionism and domestic political risks could hurt Europe, ECB vice-president Vitor Constancio said on Monday.
In conversation with CNBC-TV18, Hemant Kanawala, Head-Equity, Kotak Life Insurance discusses the fundamentals of the market.
Economists and fixed-income experts believe that while the rally in the bond market may pause it is far from done.
The benchmark 10-year government-security yield remained stuck in 8-7.5 percent range through all of 2015 and half of 2016, moving lower to sub-7 percent only when the RBI promised in April to reduce the system's liquidity deficit. The yield may now fall more.