Bond yields drop on RBI’s buyback announcement

The yields on 10-year 8.79% - 2021 bonds were trading lower by 2 basis points at 7.92% from its previous close of 7.94% on Tuesday

Bond yields dropped post Reserve Bank of India (RBI), after market hours on March 19, decided to conduct Open Market Operations (OMO) by purchasing government securities for an aggregate amount of Rs 10,000 crore on March 22, 2013 through multi-security auction using the multiple price method.

On the global front, US Treasuries prices climbed on Tuesday as a plan in Cyprus to tax bank accounts to help pay for a bailout unraveled, creating uncertainty about the island country's financial future and reviving fears about the stability of the euro-zone. Meanwhile, Brent crude rose toward $108 a barrel on Wednesday, recovering from a three-month low hit in the previous session, even as uncertainty in the euro zone after Cyprus rejected bailout terms capped the gains.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading lower by 2 basis points at 7.92% from its previous close of 7.94% on Tuesday.

The benchmark five-year interest rate swaps were trading higher by 2 basis points at 7.21% from its previous close of 7.19% on Tuesday.

The Reserve Bank of India has announced the auction of 91-day  and 364-day Government of India Treasury Bills for notified amount of  Rs 7,000 crore and Rs 5,000 crore respectively. The auction will be conducted on March 20, 2013 using 'Multiple Price Auction' method.

Bond market overlooks 25 bps repo cut; yields trade flat

The yields on 10-year 8.79% - 2021 bonds were trading flat at 7.88%

Pre Mid-quarter Policy Review: March 2013 Scenario:

Bond yields were trading flat with negative bias ahead of RBI’s mid-quarterly policy review, where a rate cut of 25 basis points is widely anticipated. The yields tilted a bit towards the red zone on speculation of RBI slashing the Cash Reserve Ratio by 25 bps, after Finance Minister’s comments of RBI taking care of liquidity issue in its mid quarter monetary policy review.

On the global front, US 10-year Treasuries slipped in Asian trade on Tuesday, however losses remained capped as investors remained concerned about a plan to tax bank deposits in Cyprus to help pay for the country's bailout. Meanwhile, Brent crude eased toward $109 a barrel on Tuesday as investors eyed a Cyprus vote later in the day on a bailout plan, which revived concerns about the euro zone debt crisis.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading lower by 1 basis point at 7.87% from its previous close of 7.88% on Monday.

The benchmark five-year interest rate swaps were trading steady at its Monday’s close of 7.14%.

The Reserve Bank of India has announced the auction of 91-day  and 364-day Government of India Treasury Bills for notified amount of  Rs 7,000 crore and Rs 5000 crore respectively. The auction will be conducted on March 20, 2013 using 'Multiple Price Auction' method.

Post Mid-quarter Policy Review: March 2013 Scenario:

The yields were trading flat after RBI just about delivered a 25 cut in key repo rate and left the cash reserve ratio (CRR), a key liquidity tool, unchanged at 4%.

The yields on 10-year 8.79% - 2021 bonds were trading flat at 7.88%

Bond yields tread water ahead of RBI’s mid quarter policy review

The yields on 10-year 8.79% - 2021 bonds were trading flat at previous close of 7.86% on Friday

Bond yields were treading water as investors were cautions of taking any position ahead of central bank's policy review on Tuesday, where the Apex bank is widely expected to reduce rates by at least 25 basis points. However, globally risk off sentiment on account of unusual bailout proposal for Cyprus could push by bond prices in remaining part of the session.

On the global front, U.S. Treasuries prices nudged higher on Monday on safe-haven demand as investors were jolted by the euro zone's decision to force Cypriot savers to take some losses in exchange for a bailout. Meanwhile, Brent crude slipped below $109 a barrel on Monday, in its steepest fall in nearly three weeks, on safe haven dollar strength.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading flat at previous close of 7.86% on Friday.

The benchmark five-year interest rate swaps were trading 3 basis points lower at 7.16% from its previous close of 7.19% on Friday.

The Reserve Bank of India has announced the auction of 91-day  and 364-day Government of India Treasury Bills for notified amount of  Rs 7,000 crore and Rs 5000 crore respectively. The auction will be conducted on March 20, 2013 using 'Multiple Price Auction' method

Bond yields tread water ahead of Budget

The yields on 10-year 8.79% - 2021 bonds were trading steady at its previous close of 7.80% on Friday 

Bond yields were treading water as investors preferred staying on the sidelines ahead of the budget on Feb 28. However, traders will also watch the railway budget on Feb 26 for cues on how serious the government is about mending its finances.

On the global front, US Treasuries prices edged higher on Friday in the absence of key US economic data, as investors prepared for testimony next week from Federal Reserve Chairman Ben Bernanke, which will be scoured for clues of when the central bank may slow or stop buying bonds. Meanwhile, Brent crude was off 7 cents at $114.03, also ending last week with its biggest loss since early December.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading steady at its previous close of 7.80% on Friday.

The benchmark five-year interest rate swaps were trading flat at its previous close of 7.22% on Friday.

Call rates inch up at start of new reserves reporting week

Interbank call rates were trading higher at 7.85/90% from its previous close of 7.75/80% since demand edged higher at the start of a new reserves reporting week. The call rates ended at 7.80/85% on Saturday.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 74,140 crore through repo window on February 22, 2013, while banks using special LAF facility borrowed Rs 74,220 crore through repo window and parked Rs 365 crore via reverse repo window on February 22, 2013.

The overnight borrowing rates touched a high and low of 7.95% and 7.85% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.87% on Monday and total volume stood at Rs 24,470.27 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.75% on Monday and total volume stood at Rs 24,185.75 crore, so far.

The indicative call rates which closed at 7.80/85% on Saturday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.

Call rates edge a tad higher on higher demand

The overnight borrowing rates touched a high and low of 7.90% and 7.85% respectively

Interbank call rates were trading at 7.85/90% from its previous close of 7.80/7.85% on Monday, on higher demand in the first week of the reporting fortnight. However, cash rates remain little changed given that cut in banks' cash reserve ratio by 25 basis points became effective on February 9 and released Rs 18,000 crore into the system.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 123,965 crore through repo window on February 12, 2013, while banks using LAF facility borrowed Rs 109,480 crore through repo window on February 11, 2013 and parked Rs 10 crore via reverse repo window on the same day.

The overnight borrowing rates touched a high and low of 7.90% and 7.85% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.82% on Tuesday and total volume stood at Rs 22,151.39 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.76% on Tuesday and total volume stood at Rs 25,246.65 crore, so far.

The indicative call rates which closed at 7.80/85% on Monday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.

Financial Coffee

(Please click on the Newspaper link to read the full article)   INDIAN ECONOMY Inflation still high, says Subbarao India, Sweden amend tax treaty New bank licence norms ‘very soon’: RBI Deputy Governor Banks’ bad loans could go up as Govt delays payments to vendors We will focus on creating macro-economic stability: Rajan Forex reserves down by $595 mn to $295 bn Finance Ministry pegs growth at 5.5% this fiscal INTERNATIONAL ECONOMY Oil Exports Trim U.S. Trade Deficit as Fuel Gap Shrinks: Economy German Exports Rose in December to Cap Trillion-Euro Year Japan Posts Back-to-Back Current-Account Deficit in December China Festive Sales Seen Gaining as Economy Strengthens EQUITY MARKET 8 sectors which could be impacted by Budget 2013 Analysts don’t expect Nifty to correct sharply in near term BSE Sensex plunges to rock-bottom in 2013 after 7-day losing streak Chidambaram to launch Rajiv Gandhi equity scheme tomorrow DEBT MARKET Bankers want SLR reduced if HTM bond limit is cut IRFC mops up Rs 5,350 cr through tax-saving bond issue Call rates edge higher on reporting Friday Bond yields edge lower on March rate cut hopes Treasury 10-Year Yields Are Poised For Weekly Decline Spanish Bonds for Gain Second Day on ECB Policy Bets COMMODITIES Growth data may put gold under pressure Copper Rises Most in a Week on China’s Trade, Auto Data Brent Oil Rises to Nine-Month High on China World Cotton Surplus Estimate Raised on Bigger Crop in China FOREX Rupee depreciates the most in over a month on Friday Euro Near 2-Week Low, Poised for Weekly Drop, on Draghi Warning Brazilian Real Touches Highest Since May as Mantega Sets Ceiling Pound Posts Biggest Weekly Gain Versus Euro Since 2011  MUTUAL FUNDS Market rally fuels exits from equity schemes Rajiv Gandhi scheme: SEBI extends new fund offer period to 30 days Are fixed maturity plans losing sheen? INSURANCE Insurers can now invest up to 15% in equity of a company IRDA proposes to lower solvency margin to 145 pc for insurers REAL ESTATE ABG Group said be in talks to sell prime Worli plot Morgan Stanley may invest up to Rs 9-10 billion in Mumbai office development: Sources Real value U.K. Property Prices Increased in January, Acadametrics Says  OPINION Tax administration, heal thyself Better than it looks Should housing be given ‘infrastructure status’? - YES Should housing be given ‘infrastructure status’? - NO KNOWLEDGE CENTER Tax-savings Bonds are  Best option before Rates Fall Park money in a contingency fund Look beyond Section 80 C for tax-saving instruments Guarding against a weak rupee How the rupee’s movements can wreck your portfolio

Bond yields edge lower on March rate cut hopes

The yields on 10-year 8.79% - 2021 bonds were trading 1 basis point lower at 7.87% from its previous close of 7.88% on Thursday.

Bond yields edged lower as the previous day's weak advance GDP Estimates re-ignited hopes of rate cuts in the March policy, especially since RBI Governor D Subbarao said he would factor in the advance estimates numbers while formulating the policy.  However, gains were limited ahead of fresh supply with RBI to auction Rs 12,000 crore of bonds in session.

In a big shocker, the Central Statistical Office (CSO) in the advance estimates has pegged country's Gross Domestic Product (GDP) growth rate for the current fiscal year to 5%, way lower than the government’s downward revision to economic growth for fiscal 2011-12, in the previous month to 6.2% from the earlier estimate of 6.5%.

On the global front, US Treasuries were slightly lower in Asian trading on Friday after better-than-expected trade data from China confirmed a recovery is under way in the world's second-largest economy, thereby boosting investors' fervor for riskier assets. Meanwhile, heading for a fourth weekly gain, Brent futures rose towards $118 per barrel on Friday, as robust trade data from China bolstered the outlook for demand, while escalating tensions in the Middle East stoked concerns over supply.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading 1 basis point lower at 7.87% from its previous close of 7.88% on Thursday.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 7.24% against its previous close of 7.25% on Thursday.

The Government of India have announced the sale (re-issue) of three dated securities for Rs 12,000 crore on February 8, 2013, which includes (i) ‘8.07 percent Government Stock 2017-JUL’ for a notified amount of  Rs 3,000 crore (nominal) through price based auction; (ii) ‘8.15 percent Government Stock 2022’ for a notified amount of  Rs 6,000 crore (nominal) through price based auction; and (iii) ‘8.97 percent Government Stock 2030’ for a notified amount of Rs 3,000 crore (nominal) through price based auction. The auctions will be conducted using multiple price method.

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(Please click on the Newspaper link to read the full article)   INDIAN ECONOMY Can’t borrow beyond a limit: Chidambaram Gross direct tax  grows 7.1%, Income Tax 15% in Apr-Nov Permit banks to buy back gold coins from public: RBI report India’s long-term potential rate is 7%: Goldman Sachs IMF calls for slashing SLR to spur pvt investments Net direct tax  grows 12% in April-Jan INTERNATIONAL ECONOMY UK CEOs expect more revenue German Factory Orders Add to Signs of European Recovery: Economy Netherlands AAA Outlook Cut as Fitch Cites Shocks to Economy China’s January Data Gap Vexes Economists EU Seeks to Advance U.S. Trade Deal as China’s Role Grows EQUITY MARKET Sensex falls for 5th day, NTPC, Coal India shares down over 2%, Nifty positive at close Performance of Asia-Pacific coal firms to remain subdued in 2013: S&P It’s only a conditional nod for Diageo-United Spirits open offer Merger, demerger deals need SEBI approval now Banking, fin services stocks drop on weak Q3 earnings DEBT MARKET Deposits growth continues to lag at 13.08% Call rates remain steady around previous close Bond yields edge tad higher tracing rising global crude oil prices Bunds Advance Before ECB Meeting as Spanish Notes Rise U.S. Treasury Sees Floating-Rate Note Sale Within Next Year Taiwan 10-Year Bond Yields Rise to 7-Month High  COMMODITIES Crude oil up on healthy economic indicators Time to dump gold for platinum Coffee Exports From India Set to Drop as Europe Demand Slows Carmakers Use Aluminum Over Steel in Boost for Rio: Commodities Platinum Advances to 16-Month High on Supply Woes; Gold Climbs FOREX Rupee slips a tad Brazil Swap Rates Increase on Inflation Concern; Real Advances Aussie Declines After Retail Sales Unexpectedly Fall Pound Rises Before Carney Testimony, Rate Decision; Gilts Euro Falls Toward One-Week Low Versus Dollar Before ECB   MUTUAL FUNDS Mutual funds exposure to banking stock soars to over 3-year high Gold holding through ETF touches 40,000 kg Gilt assets jump 10 times in first 3 quarters of FY13 INSURANCE Planning to buy an endowment plan? It may pay to wait a few more days Irda to Stop Schemes that Guarantee Highest NAV REAL ESTATE Commercial project 'Spire Edge' at Manesar designated as World Trade Center Panacea, Bestech join to develop township OPINION Why was IRDA sleeping? Taxing FDI Burning issues in real estate regulation Sukumar Mukhopadhyay: GST - 'Paradise lost' from fractured design KNOWLEDGE CENTER Tax-savings Bonds are  Best option before Rates Fall Park money in a contingency fund Look beyond Section 80 C for tax-saving instruments Guarding against a weak rupee How the rupee’s movements can wreck your portfolio

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(Please click on the Newspaper link to read the full article)   INDIAN ECONOMY IMF CUTS GROWTH FORECAST Global Consumer Confidence Dips, Indians Still Most Optimistic Economy to grow slower at 5.6% in 2012-13: NCAER Policy changes key to our ratings review: Fitch INTERNATIONAL ECONOMY Fed Says Banks Forecast Improved Lending Outlook for 2013 Housing Packs Punch for U.S. Growth in 2013 and Beyond Obama’s Fiscal 2014 Spending Plan Said to Be Delayed Until March Australia’s Trade Deficit Narrows on Coal, Iron Ore Export Surge  EQUITY MARKET Banking, fin services stocks drop on weak Q3 earnings Sensex ends at 3-week low sentiment still weak FMCG volumes decline, but margins hold fort in third quarter India Inc sought debt restructuring for 126 cases in 2012 India on track to become steel powerhouse: E&Y Global M&A in healthcare IT grows $7 b in 2012  DEBT MARKET Short-term Paper Yields Fall Below Bank Base Rates Bond yields tread water on Monday Call rates edge tad higher in second half of reporting fortnight Spanish, Italian Bonds Slide Amid Signs of Political Risk China Five-Year Swaps Climb to Two-Week High as Economy Improves Brazil’s Swap Rates Drop on Outlook for Currency; Real Declines COMMODITIES Gold remains firm, silver falls, Platinum Rises to 17-Week High; Palladium, Gold Advances Platinum Supply Falls to 13-Year Low as Mines Close: Commodities Oil Trades Near One-Week Low on Iran Talks Offer, Europe Crisis  FOREX Rupee settles at 53.28 against dollar Euro May Hit 3-Week Low, Credit Suisse Says: Technical Analysis Euro to Weaken to 10-Week Lows Over Next Year, Wells Fargo Says Pound Rises Versus Euro Even as Construction Contracts  MUTUAL FUNDS Gilt assets jump 10 times in first 3 quarters of FY13 Budget may offer tax sops on pension products by mutual funds MFs sport 'RGESS' tag to tap tax-saving investment  INSURANCE Irda to Stop Schemes that Guarantee Highest NAV IRDA likely to finalise norms for traditional life insurance policies soon REAL ESTATE Need to relax land use norms to boost low-cost housing: Maken Discounts through real estate group buys OPINION Sukumar Mukhopadhyay: GST - 'Paradise lost' from fractured design Abheek Barua: Post-policy blues Britain drifts away from EU KNOWLEDGE CENTER Tax-savings Bonds are  Best option before Rates Fall Park money in a contingency fund Look beyond Section 80 C for tax-saving instruments Guarding against a weak rupee How the rupee’s movements can wreck your portfolio

Financial Coffee

(Please click on the Newspaper link to read the full article)   INDIAN ECONOMY Plan Expenditure may face substantial cut in Budget ‘India’s savings rate to plunge to 10-year low this fiscal’ Close to 6% growth on manufacturing picking up in Jan-Mar: Rangarajan Global Economy: China factories see only modest pick-up, Europe stabilises, HSBC, Markit PMIs show INTERNATIONAL ECONOMY Service Industries in U.S. Probably Maintained Momentum China Services Industries Expanded at Faster Pace in January Japan Finance Minister Models Policy After 1930s Stimulus China Reports highest Capital-Financial Account Gap for 2012 Payroll Gains in Recent Months Show Progress in U.S. Jobs Market Euro Rallies to Highest Since 2011 as ECB Balance Sheet Shrinks European Stocks Post Weekly Drop; Santander, Saipem Slide   EQUITY MARKET Trade cautiously as bears seem to be in control of markets: Analysts Markets may see consolidation, Q3 results to set tone: experts Market cap of top 7 companies dip by Rs 30,797 cr FIIs invest Rs 22,000 cr into Indian equities in Jan LIC cuts holdings in 27 Nifty firms, sells shares worth Rs 8k cr DEBT MARKET Seven states to auction 10-yr bonds to raise Rs 7,670 cr NHB to raise Rs 5,000 crore from tax-exempt bonds by March-end Why investors don’t bank on tax-saving deposits Italian Bonds Fall After 10-Year Debt Sale; Irish Notes Advance Credit Swaps in U.S. Fall as Hiring Rises, Manufacturing Expands Treasury Yields Rise to Highest Since April as U.S. Adds Jobs COMMODITIES Health will be the fastest growing insurance business: Tapan Singhel Oil Completes Longest Run of Weekly Gains Since 2004 Commodities Post Longest Run of Weekly Gains Since 1996 Crude oil prices up in Asian trade   FOREX Euro Rallies to Highest Since 2011 as ECB Balance Sheet Shrinks Pound Falls Versus Euro as Data Signals Recovery Stalling Asian Currencies Decline in Week as Yen Tumble Threatens Exports Dollar Drops to 14-Month Low on U.S. Jobs; Yen Slides Rupee rallies on fund inflows  MUTUAL FUNDS MFs sport 'RGESS' tag to tap tax-saving season flows MFs garner over Rs 1 lakh cr from investors in Apr-Dec 2012 Business Line:-SBI Magnum Equity: Invest Business Line:-Building on Banking and Energy Market regulator Sebi to introduce product labelling for Mutual Funds soon INSURANCE Health will be the fastest growing insurance business: Tapan Singhel Drop in average premium size of life insurance policies: Deloitte REAL ESTATE Discounts through real estate group buys China Home Prices Have Biggest Gain in 2 Years Maytas Properties agrees to pay Rs 850 crore as settlement to SRS Investments, JM Financial OPINION Gold struggles to gain traction Asset markets are driving inflation India’s GDP growth estimate KNOWLEDGE CENTER How to reap benefits from a diversified investment portfolio Park money in a contingency fund Look beyond Section 80 C for tax-saving instruments Guarding against a weak rupee How the rupee’s movements can wreck your portfolio