Debt Market View April 14

The combined CPI inflation for Feb-14 came at 8.10% (8.79% for Jan-14) largely driven by a sharp drop in vegetable prices. WPI based inflation for Feb-14 eased to 4.68% compared with 5.05% in the previous month.

 

Government borrowing for 2014-2015:

Borrowing Type

Amount (in Rs. Crores)

G-Sec Gross Borrowings

597000

G-Sec Net Borrowings

457000

Budgeted Redemptions

140000

 

 

RBI Policy April 1 – Highlights:

 

  1. The policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0% 
  2. Liquidity provided under 7-day and 14-day term repos increased from 0.5% of net demand and time liabilities (NDTL) of the banking system to 0.75% 
  3. The liquidity provided under overnight repos under the LAF decreased from 0.5% of bank wise NDTL to 0.25% with immediate effect 
  4. RBI policy stance firmly focuses on keeping the economy on a disinflationary glide path, intending to hit 8% CPI inflation by January 2015 and 6% by January 2016 
  5. To encourage longer-term flows and reduce volatility, FPI investments in G-Secs would henceforth, be permitted only in dated securities of maturity of one year and above, and existing investment in T-bills will be allowed to taper off on maturity/sale. Any investment limits vacated at the shorter end would be available at longer maturities, thus, overall FPI limits will not be diminished

Period

T-Bill

CD

1m

8.30%

9.42%

3m

8.30%

9.40%

6m

8.60%

9.25%

1yr

8.60%

9.15%

 

Period

G-Sec

Corp bond

3yr

8.78%

9.35%

5yr

8.86%

9.56%

10yr

8.80%

9.54%

15yr

9.10%

9.48%

As on March 28

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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