Product Updates

Government bonds prices continued to rule weak on sustained selling from banks and corporates, while the overnight call money rates recovered on fresh demand from borrowing banks. The 8.83 per cent government security maturing in 2023 fell to Rs 100.34 from Rs 100.5050 previously, while its yield moved-up to 8.77 per cent from 8.75 per cent. The 8.28 per cent government security maturing in 2027 declined to Rs 93.15 from Rs 93.38, while its yield gained to 9.17 per cent from 9.14 per cent. The 7.28 per cent government security maturing in 2019 also dipped to Rs 93.3250 from Rs 93.42, while its yield climbed to 8.87 per cent from 8.85 per cent. The 8.12 per cent government security maturing in 2020, the 8.24 per cent government security maturing in 2027 and the 7.16 per cent government security maturing in 2023 were also quoted low at Rs 95.40, Rs 92.95 and Rs 87.85, respectively. The overnight call money rate ended higher at 8.00 percent from 7.50 per cent yesterday...

Suzuki Motor Chairman Osamu Suzuki & Maruti Suzuki Chairman R C Bhargava Maruti Suzuki, the country's largest car maker, on Tuesday took the market and shareholders by surprise when it announced its proposed passenger car facility in Gujarat would not be operated by it but its parent, Japan's Suzuki Motor Corporation (SMC). A new firm, Suzuki Motor Gujarat Pvt Ltd, to be registered by April, will exclusively contract-manufacture and sell vehicles to Maruti Suzuki India Ltd (MSIL), which will only market those vehicles in India and abroad. Many analysts, including research & analysis firm InGovern, raised questions on "corporate governance&" issues and said minority shareholders should challenge the deal, as their interests would be adversely affected. The equity market panned the proposed move, pulling down the Maruti Suzuki stock. On BSE, the scrip tumbled 8.12 per cent, the most since November last year. This was despite the company repor...

The benchmark bond yields on Tuesday fell two basis points or 0.23 per cent to close at Rs 8.75% pushing up prices by 11 paisa (or 0.11%) to Rs 100.51 from Rs 100.40 on Monday. Prices and yields move in opposite direction. The ten-year yield hit intra-day high at 8.79% immediately after the Reserve Bank of India hiked its policy or repo rate by 25 bps to 8%. Markets were expecting no change in rates. "Yields rose in a knee-jerk reaction," said Mohan Shenoi, head - treasury at Kotak Mahindra Bank. "But markets drew comfort from the governor's future guidance. After this latest rate hike, the central bank may not raise rates further." In the mid-quarter policy last December, markets were expecting a rise of 25 bps but the central bank had not changed rates. In the latest quarterly policy the Reserve Bank hinted at no further rate hikes. "The extent and direction of further policy steps will be data dependent," RBI governor Raghuram Rajan said...

Rupee snaps 3-day fall as RBI surprises with rate increase The rupee posted its biggest single-day gain in over two months on Tuesday, snapping a three-day falling streak after the central bank unexpectedly raised interest rates to bring down consumer inflation. Investors were also comforted after the Reserve Bank of India (RBI) indicated it did not foresee more near-term policy tightening should retail inflation ease in line with the central bank's projections. The rupee has had an uneasy relationship with the prospect of interest rate hikes. Although higher rates can make the currency more attractive for foreign investors, too much tightening can dent economic growth, eroding confidence, and in turn hitting stocks. The rate hike was intended to curb inflation but also comes as emerging markets have been routed in part by expectations the Federal Reserve will continue to wind down its monetary stimulus after concluding its two-day meeting on Wednesday. "We ...

Bond valuations appear attractive: Jajoo The fixed income markets began last week carrying forward the positive momentum of the recent weeks with benchmark 10-year government bond yield dropping to an intra-week low of 8.48%, a near three-month low. However, in a dramatic turnaround, reversed the momentum with benchmark yield closing at 8.74%, a net uptick of 11 bps points for the week and a spike of 26 bps from the intra-week low. Mid-week, the much awaited Urjit Patel committee report on a new framework for monetary policy was released that advocated an inflation targeting approach with recommendation to set consumer price inflation as the nominal anchor. The report suggested the target for CPI inflation at 4% with a range of 2% variation. With current CPI at 10% and an intermediate target of 8% by end 2014, it brought back inflationary concerns to the foreground yet again reigniting doubts about possibility of further rate hikes. Around the same time, emerging market currenci...

The aggregate net profit for the mutual fund industry for FY13 grew nearly 6% over the previous year even as nearly half the number of fund houses in the MF universe posted losses. Aggregate net profit for all fund houses (excluding Franklin Templeton MF and PPFAS MF) for FY13 grew 5.7% over the year-ago fiscal, data collated from Outlook Asia Capital show. However, the industry clocked a robust 22% growth in assets under management (AUM) — to R8.16 lakh crore — at the end of FY13 from R6.64 lakh crore in FY12. "Assets have grown on the fixed-income side, which tend to make lesser money than equity assets. So, profits have grown at a smaller pace than asset growth," said Vicky Mehta, senior investment consultant, Morningstar India. Overall, 22 fund houses posted losses, the same number as FY12. An analysis of 15 of the bottom-ranked AMCs in terms of the assets they manage shows that their consolidated net losses widened to R161 crore in FY13 from R144 crore in FY1...

IRFs can be an interesting option If you have a view on interest rates, that is, if you feel these are either headed up or down, you have the option of participating in the fixed income market by investing less than Rs 10,000. Thanks to the new interest rate futures (IRFs) launched by MCX-SX on Monday, and the National Stock Exchange on Tuesday, it is possible for retail investors to benefit from their view on these. IRFs are similar to equity futures. Here the future contracts of 'buy' or 'sell' are of underlying government bonds, similar to future contracts of stocks.  The minimum contract value is pegged at Rs 2 lakh and initial margin which you have to pay upfront is around three per cent. This works out to Rs 6,000. If you have a view that interest rates on G-Secs are likely to come down, say from current levels of  8.5 on 10-year G-Sec to eight per cent, the options to invest and make returns are an income fund, tax-free bonds, non-convertible debe...

Experts feel the Reserve Bank of India (RBI) could announce more steps to ease liquidity in the system in the third-quarter review of monetary policy next week. These might include raising the limit on repo borrowing or term repo borrowing. It could also announce more purchase of government bonds. The weighted average rate (WAR) of call money was 8.22 per cent on Tuesday compared with 8.73 per cent on Monday. The WAR on Collateralised Borrowing and Lending Obligation was 7.94 per cent on Tuesday, compared with 8.71 per cent on Monday. Suyash Choudhary, head-fixed income, IDFC Mutual Fund, said: "The market is looking forward to more liquidity easing measures. If RBI is serious about re-anchoring overnight rates towards repo, I would expect more measures on liquidity. RBI can either increase the cap they have on overnight repo borrowing or term repo. Alternatively, they can infuse more liquidity through open market operations. With these measures immediately after the m...

The Rs 50,000-crore debt-switch programme, which is expected to begin anytime now, may not have any major impact on bond yields because most market participants will not come to know about it. The Reserve Bank of India (RBI) is expected to announce completion of the  programme during the third quarter monetary policy review on January 28. Under the Rs 50,000-crore debt-switch plan stated in the Union Budget 2013-14, the government said it would buy short-dated debt and, in turn, sell longer-dated bonds. This is aimed at spreading out redemptions to later years. The timing may be perfect to conduct a switch-over because of the falling bond yields. This will ensure that the programme sails through in a non-disruptive manner, also the aim of the central bank. The programme will be conducted in a way that most participants will not be fully aware of it, like the way RBI brought the oil marketing companies back to the market for their dollar demand, without having much volat...

The Reserve Bank of India on Monday barred banks from offering gold loans worth more than 75 per cent of the value of gold jewellery and ornaments. It is felt the move is aimed at ensuring a level playing field between banks and non-banking financial companies (NBFCs) offering such loans. "As a prudential measure, it has been decided to prescribe a loan-to-value (LTV) ratio not exceeding 75 per cent for banks' lending against gold jewellery (including bullet repayment loans against pledge of gold jewellery),&" the central bank said in a notification. Initially, RBI had restricted the LTV ratio for gold loan NBFCs at 60 per cent. But last week, it had increased the cap to 75 per cent. Banks, on the other hand, had no such LTV cap on their advances against gold. Bankers claim most banks have been keeping a 20-25 per cent margin while offering gold loans to customers. "Previously, there was no cap. But most banks have been maintaining an LTV ratio of 75-...

Fiscal deficit, bond switch worries may hit yields Concern on the government's fiscal deficit exceeding the target and the government's Rs 50,000-crore bond debt-switch programme may hit the bond market. While the latter is being viewed as a greater concern, the former may gain prominence in the next few weeks. The government had pegged the fiscal deficit for this financial year at 4.8 per cent of gross domestic product (GDP). On many occasions, it has assured it will be able to meet the target. But recently, concern emerged on this front due to challenges on the revenue and expenditure fronts. "Concern on fiscal deficit is strong for a couple of factors. Revenue growth was targeted at 20 per cent in the Budget. Now, it looks like a very ambitious target. So far, the numbers do not support 20 per cent growth. There may be slippages on the revenue target. The concerns are on disinvestments and spectrum sales. If you look at the last spectrum sale, the finan...

MUMBAI: The RBI said it would buy up to Rs 100 billion ($1.62 billion) of bonds via open market operations on January 22. The Reserve Bank of India said it would buy 8.07 per cent 2017 bonds, 7.28 per cent 2019 bonds, 7.16 per cent 2023 bonds and 8.28 per cent 2027 bonds. Thanking you Regards, Rajesh Kumar Kathpalia ¤ SMC Global 17,Netaji Subhash Marg,Daryaganj, New Delhi-110002 Mobile No 9891645052 Email Id: rajesh.ipo@smcindiaonline.com -- You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group. To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com . For more options, visit https://groups.google.com/groups/opt_out .

Government bonds extend gains for sixth session with benchmark 10-year bond yield down 3 bps at 8.59 per cent. Absence of debt sale till RBI meet and hopes of no further rate hike driving bond rally. The government has also deferred this week's debt sale and that the sale may actually be cancelled is keeping sentiment for bonds positive. A sharp fall in yields is, however, unlikely as there is likely to be profit-taking around 8.58-60 percent levels, dealers say. US Treasuries prices gained on Thursday after inflation data came in as expected and amid strength in German government debt and overnight demand for safe-haven US debt. Source » Economic Times Thanking you Regards, Rajesh Kumar Kathpalia ¤ SMC Global 17,Netaji Subhash Marg,Daryaganj, New Delhi-110002 Mobile No 9891645052 Email Id: rajesh.ipo@smcindiaonline.com -- You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group...

MUMBAI: Government bonds rose to their highest in more than 2-1/2 months on Wednesday as a sharp easing of headline inflation cemented bets the central bank will keep interest rates on hold at its policy review later this month. Data on Wednesday showed headline inflation eased to a five-month low of 6.16 per cent in December, helped by a softening in vegetable prices. The drop in wholesale inflation came on the back of a fall in retail inflation to a three-month low, reinforcing expectations that the Reserve Bank of India will hold interest rates for a second consecutive month on Jan. 28. Foreign funds have turned large buyers of Indian debt, purchasing nearly $2 billion in the four sessions to Monday. Of this, they bought $860 million on Monday, data from the Securities and Exchange Board of India showed. After raising interest rates by 50 basis points over September and October, RBI Governor Raghuram Rajan held rates steady last month, saying inflation data would largely...

Among the finance ministry's efforts to contain the fiscal deficit this year, it appears, is some financial jugglery. Much of the additional expenditure is being rolled over to next financial year, while the tax and dividend income to accrue next year is being brought forward into this year's books. The aim is to ensure the fiscal deficit 'red line' drawn by Finance Minister P Chidambaram — of 4.8 per cent of gross domestic product — is not breached. Tax officers are reportedly asking companies to make higher advance tax payments and, if their actual profits turn out to be lower than projections, take refunds next year. If refunds are high, this would mean an extra burden on the next government, as the finance ministry pays interest at 0.5 per cent per month, or six per cent a year, on refunds to taxpayers. For companies, this means the money that could have been invested elsewhere lies idle. Companies make advance tax payments in four instalments — in June, Sept...

Corporate bond issuances seen picking up in fourth quarter As stability is expected in interest rates, corporate bond issuances through private placement are seen picking up in the fourth quarter. The rise in issuances may be close to 25% compared with last quarter. Issuances slowed down in mid-July when the Reserve Bank of India (RBI) resorted to a host of measures to tighten liquidity in a bid to arrest volatility in rupee. Consumer Price Index (CPI) inflation has already eased and Wholesale Price Index (WPI) inflation for December may also ease due to which RBI may resort to a pause in key policy rates in the third-quarter monetary policy review to be detailed later this month. This could result in coupon rates falling from current levels. Besides that the borrowing programme of the government is expected to be completed in the first week of February due to which traders will have appetite for these corporate bonds. "Some revival in corporate bond market is possible....

RBI eases hedging rules for currency trading  MUMBAI (Reuters) - The Reserve Bank of India (RBI) said on Monday it had eased rules for hedging foreign exchange exposures, allowing greater flexibility for cancelling and rebooking forward contracts. The RBI is now allowing domestically-held forward contracts for all current as well as capital account transactions with a residual maturity of one year or less to be freely cancelled and taken out again, called rebooking. Foreign investors will be allowed to rebook 10 percent of the value of cancelled contracts, up from nothing previously. Before the changes domestic exporters could cancel and rebook up to 50 percent of the contracts booked in a financial year for hedging their contracted export exposures. Importers were are allowed to cancel and rebook up to 25 percent of contracts booked in a financial year. These limits have been dropped. The RBI had issued several strictures on rupee trading after the rupee started ...

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Bond yields set to fall The Reserve Bank of India's (RBI) decision to defer the auction of government bonds for a notified amount of Rs 15,000 this Friday is set to boost bullish bond market sentiments further. Besides that the Consumer Price Index (CPI) inflation for December eased to a three-month low.   "On review of the Government of India's (GoI) cash position and funding requirement, it has been decided, in consultation with GoI, to defer the auction of GoI dated securities amounting to Rs 15,000 crore scheduled to be held on January 17,&" said RBI on Monday.   As per the issuance calendar of marketable dated securities released in September, the borrowing programme of the government was to get over in the first week of February.    "The yield on the 10-year benchmark government bond may move down by 10-15 basis points on Wednesday,&" said Siddharth Shah, vice president, STCI Primary Dealer. The yie...

The volatility in overnight rates over recent months is prompting market participants to request the Reserve Bank of India (RBI) for narrowing the gap between the repo rate and the Marginal Standing Facility (MSF) one. Repo is the rate at which banks may borrow from RBI for short-term needs. MSF is meant for overnight borrowing, on all working days. The gap, currently 100 basis points (bps), was fixed by the central bank following the Mohanty committee recommendations in 2011. However, during the currency crisis of 2013, RBI decided to broaden the gap, to arrest volatility in the foreign exchange market. According to treasury officials, the issue will be taken up during the pre-policy discussion this week. A meeting of the Fixed Income Money Market and Derivatives Association of India, Foreign Exchange Dealers' Association of India and Primary Dealers' Association of India with a deputy governor of RBI is scheduled on Thursday. RBI will announce its third quarter review...

Dear All, Warm Greetings ! Wish you & your Family A Very Happy Lohri & Makar Sankranti. Thanking you Regards, Rajesh Kumar Kathpalia ¤ SMC Global 17,Netaji Subhash Marg,Daryaganj, New Delhi-110002 Mobile No 9891645052 Email Id: rajesh.ipo@smcindiaonline.com -- You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group. To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com . For more options, visit https://groups.google.com/groups/opt_out .

The Securities and Exchange Board of India (Sebi), tweaking the position it had taken in its earlier draft on Foreign Portfolio Investors (FPI), has tightened the rules for issue of participatory notes (P-notes). The regulator had barred only Category-III FPIs from issuing P-notes in the draft guidelines that were part of its October board meeting agenda. However, the gazette notification, which has given the FPI framework an official status, also bars certain entities under Category-II from issuing P-notes. Participatory notes, or offshore derivative instruments, are used by foreign investors wishing to invest in the Indian markets without registering with Sebi. Kishore Joshi, senior associate (funds), Nishith Desai Associates, said the intent might have been to ensure the regulator had a certain degree of control over foreign investors - through a foreign regulator, if not directly. "Considering that the Indian regulators (including Sebi) do not have direct juris...

Companies managed by state governments are flocking to the primary bond market offering attractive interest rates as they try to mop-up excess liquidity among exempted provident funds, which recently received around Rs 3,000 crore as interest income. At least seven state-level undertakings (SLUs) are in the fray to sell debt to PF bodies. Four of them have already launched their offerings. For these exempted PF bodies - non-government provident funds which manage their corpus at individual company levels, instead of transferring the money to the government's Employees' Provident Fund Organsiation - SLU instruments provide high returns with a level of security as they come with state government guarantees. Still, they face the risk from any major deterioration in state finances, be it for natural calamity or something else, which may result in dilution of the guarantee, bond dealers said.  There are an estimated 2,700 exempted provident funds. They receive annual int...

Bonds jump, dollar slips on weak U.S. jobs data NEW YORK (Reuters) - U.S. government debt prices jumped while the dollar fell on Friday as weaker-than-expected jobs growth in December cast some doubt on the U.S. economic outlook. Analysts said the jobs setback was affected by unusually cold weather and was likely to be temporary, though it was enough to raise some questions about the next move from the Federal Reserve. The report helped support the view the U.S. central bank, which last month announced it would begin scaling back its massive stimulus program, will take a gradual approach to reducing its bond-buying program this year. "People are hoping this is an anomaly, and it seems like it was related to the weather, but if it is a trend, then that is a real threat to GDP and corporate earnings growth." The 10-year gilt yield fell 12 basis points,to 2.865 percent, the biggest decline since Oct. 22 The 10-year note's yield fell to a session low of 2.85...

  Dear All,   Please find attached Banking Matrix  of - " Public Issue of Tax Free Bonds Issued by National Highways Authority of India."( Source: Shelf Prospectus dated January 09, 2014 & Prospectus Tranche - I dated January 09, 2014)   Issue Opening Date:       Jan  15, 2014 Issue Closing Date:          Feb 05, 2014* ISSUE DETAILS:   Options Series of Bonds Category I, II & III # Tranche I Series IA Tranche I Series IIA Coupon Rate (%) p.a. 8.27 8.50 Annualized Yield (%) p.a. 8.27 8.50 Options Series of Bonds Category IV # Tranche I Series IB Tranche I Series IIB Coupon Rate (%) p.a. ...