Call rates remained dormant within 6.40%-6.75%. However, the exchange rate continued to be volatile and closed the week at Rs. 48.52 / USD. In spite of the volatile exchange rate, the forward premia came down by 25-35 bps on heavy receiving interest. The benchmark 6 month premium closed the week at 5.65%. The OIS curve moved down further with the benchmark 1 year OIS trading at a historic low of 7.10%
Government Securities
The entire GOI yield curve (Graph alongside), is now at its historic low levels. And this is amidst high trading volumes. The 91D cut-off also reached a historic low of 6.56%.
* All yields mentioned are annualized and spreads are over annualized GOI Securities.
The bullishness In the GOI security markets spilled over into the Corporate Debt markets also. The primary market for corporate debt remained buoyant. Neyveli Lignite Corpn. closed its 5 year AAA rated issue at 8.90% collecting Rs. 409 cr. LIC Housing Finance, Gujarat Ambuja, Nuclear Power Corpn. and Power Finance Corpn. opened their issues.
We expect the Call Rate to stay in the tight 6.50%-6.75% range.
The rally in the GOI markets has further 10-15 bps to go. The corporate bond markets is likely to witness large number of primary market issues, and higher trading volumes.
Illiquid AAA and AA+ spreads over AAA are likely to reduce further. The activity in the CP market should continue at a feverish pace.
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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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We expect the Call Rate to stay in the tight 6.50%-6.75% range.
The rally in the GOI markets has further 10-15 bps to go. The corporate bond markets is likely to witness large number of primary market issues, and higher trading volumes.
