Short term markets were volatile as Call traded between 6.50%-7.00%, shooting up to 13.00% levels towards the end of the year. Rupee / Dollar ended the year at Rs. 48.79 / USD, as RBI continued its dollar purchases through State Bank and its subsidiaries. The benchmark 6 months premium ending the week at 5.70% levels, lower than last week’s levels of 5.80%. 1 year OIS levels were traded in the 6.80%-6.90% range.
Government Securities
Due to a short week and year end factors the market traded in a dull 15 bps range for all the GOI securities. The benchmark 10 year yields traded in the 7.30%-7.45% range. However, trading sentiment turned bullish again towards the end of the week, especially as the GOI borrowing time-table announced by the RBI was relatively lighter than expected.
* All yields mentioned are annualized and spreads are over annualized GOI Securities.
There was no activity in the corporate debt markets as CP rates shot upto 8.00% levels and not many corporate issuers wanted to issue in an uncertain market. 5 Year AAA issues traded in the 8.70%-8.75% range.
The week ahead should see active trading in the GOI securities markets returning back as the GOI borrowing program kicks off with a Rs. 7000 cr. issue. Corporate debt markets should also resume their lower trend and CPs should gradually ease to 7.50%-7.75% levels.
Call rates are likely to remain balanced in the 6.50%-7.00% levels and the forward premia should also trend down.
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The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. The financial markets, and especially the Indian money markets, are illiquid and inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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The week ahead should see active trading in the GOI securities markets returning back as the GOI borrowing program kicks off with a Rs. 7000 cr. issue. Corporate debt markets should also resume their lower trend and CPs should gradually ease to 7.50%-7.75% levels.
