Call rates stayed in the 6.40%-6.75% range throughout the week. The Rupee, after appreciating last week, depreciated to close at Rs. 48.36 / USD levels. Forward premia closed down by 15-20 bps, with the benchmark 6 month premia closing the week at 5.90%. 1 year OIS traded at its historic low levels of 7.13%, before moving up and closing the week at 7.18%.
Government Securities
There was an overhang of a GOI auction announcement at the beginning of the week, as the RBI announced 10 year State Loan auction on tap at 8.30% for 10 years. Overall, the markets ended the week in a dead range, except the short end which rallied. The 91D and 364D T-bill cut-offs were also at their historic lows at 6.60% and 6.76%, respectively.
* All yields mentioned are annualized and spreads are over annualized GOI Securities.
AAA rated Hindustan Petroleum closed its issue at 8.50% collecting Rs. 400 cr. Apart from this, AAA rated Neyveli Lignite Corpn. is also in the market raising 5 year money and AAA rated Exim Bank opened its 5 year issue at 8.60% along with Indo Gulf rated AAA by Fitch opening a 5 year issue in the 8.90%-9.00% range.
We expect the Call rate to range between 6.50%-6.75%. The forward premia may remain range bound along with the OIS markets. The benchmark 1 year OIS should move within 7.15%-7.25%. The week should start on a nervous note, anticipating a GOI auction.
The 3 month P1+ CP rates are likely to trade in the 7.40%-7.55% range.
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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 range between 6.50%-6.75%. The forward premia may remain range bound along with the OIS markets. The benchmark 1 year OIS should move within 7.15%-7.25%. The week should start on a nervous note, anticipating a GOI auction.
