Strong demand for the money market and 2Y bonds pulled the yields down

April started with the Reserve Bank of India (RBI) announcing its policy on April 01, 2014, where the RBI decided to do the following:

 

  • Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0%
  • Increase the liquidity provided under 7-day and 14-day term repos from 0.5 per cent of net demand and time liabilities (NDTL) of the banking system to 0.75 per cent
  • Decrease the liquidity provided under overnight repos under the LAF from 0.5% of bank-wise NDTL to 0.25% with immediate effect.

 

RBI has decided to grant “in-principle” approval to two applicants – IDFC Limited and Bandhan Financial Services Private Limited, to set up banks under the guidelines on Licensing of New Banks in the Private Sector issued on February 22, 2013.

 

The combined CPI inflation for March-14 came at 8.31% compared with 8.10% for Feb-14. WPI based inflation for March-14 was 5.70% compared with 4.68% in Feb-14.

 

Strong demand for the money market and 2Y bonds pulled the yields down. Asset managers were seen parking funds accumulated in their long-term closed ended NFOs.


FIIs sold treasury bills after RBI’s circulation. Short maturity bills faced most of the heat.

 

As on April 30

T-Bill

CD

1m

8.66%

8.80%

3m

8.82%

9.06%

6m

8.87%

9.18%

1yr

8.89%

9.21%

 

 

 

 

 

 

 

 

 

As on  April 30

G-Sec

Corp bond

3yr

8.75%

9.36%

5yr

8.80%

9.41%

10yr

8.82%

9.52%

15yr

9.12%

9.53%

 

 

 

 

 

 

 

 

Liquidity, we believe, may improve considerably this month. The first two weeks may see liquidity to be a tad tight, after which consistent inflows via redemption and interest payment would support overnight rates and short end of the money market.

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

No votes yet.
Please wait...

Leave a Reply

14 − 3 =

"Prevent unauthorized transactions in your trading and demat account- Update your mobile numbers/email IDs with your Stock Broker and Depository Participant. Receive information of your transactions directly from Exchange on your mobile/email at the end of day. Receive alerts on your Registered Mobile for all debits and other important transactions in your demat account directly from CDSL on the same day call us on 02228584545 Email : customerservice@acm.co.in

Copyrights @ 2013 Asit C Mehta Investment Interrmediates Ltd.(ISO 9001:2015 certified company)