Indian bonds complete biggest weekly gain in more than a month
Mumbai: India's 10-year bonds capped their biggest weekly advance in more than a month on optimism a revision of caps on debt purchases by foreigners will boost inflows and a pick-up in rains will restrain food prices.
India raised the limit on the amount of government bonds that overseas investors can buy by $5 billion to $25 billion this week. The move is a catalyst for local bonds and the rupee in a yield-hungry world, according to BNP Paribas SA. The nation simultaneously cut the quota meant only for long-term investors such as sovereign wealth funds to $5 billion from $10 billion, thus keeping the overall limit for foreign investment in sovereign notes unchanged at $30 billion.
"The raising of foreign limits, recent progress of the monsoons and the easing of inflation in June are all positive factors for the bond markets," Sujoy Kumar Das, head of fixed income at Religare Invesco Asset Management Co. in Mumbai, said by phone. "It's been a good week and we expect yields to remain soft, given India's improving macroeconomic indicators."
The yield on the 8.83% notes due November 2023 slid 10 basis points, or 0.10 percentage point, from 18 July to 8.67% in Mumbai, according to the central bank's trading system. That's the biggest weekly decline since the period ended 6 June. The rate rose two basis points on Friday.
The shortfall in the June-September monsoon, which accounts for more than 70% of India's annual rainfall, was 24% of the 50-year average, the weather bureau said on Thursday. That compares with a 43% deficit on 11 July. The revival has eased concern that deficient rainfall will hurt farm output and boost food prices, which make up about half of India's consumer-inflation basket.
India sold Rs.14,000 crore of bonds at an auction on Friday, including Rs.7,000 crore of new 10-year debt. The bonds due 2024 were set a coupon rate of 8.40%, according to a statement from the central bank.
Foreign funds were net buyers of $517.7 million of local company and government debt on Thursday, their biggest single-day purchase since 6 June, exchange data showed on Friday.
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India raised the limit on the amount of government bonds that overseas investors can buy by $5 billion to $25 billion this week. The move is a catalyst for local bonds and the rupee in a yield-hungry world, according to BNP Paribas SA. The nation simultaneously cut the quota meant only for long-term investors such as sovereign wealth funds to $5 billion from $10 billion, thus keeping the overall limit for foreign investment in sovereign notes unchanged at $30 billion.
"The raising of foreign limits, recent progress of the monsoons and the easing of inflation in June are all positive factors for the bond markets," Sujoy Kumar Das, head of fixed income at Religare Invesco Asset Management Co. in Mumbai, said by phone. "It's been a good week and we expect yields to remain soft, given India's improving macroeconomic indicators."
The yield on the 8.83% notes due November 2023 slid 10 basis points, or 0.10 percentage point, from 18 July to 8.67% in Mumbai, according to the central bank's trading system. That's the biggest weekly decline since the period ended 6 June. The rate rose two basis points on Friday.
The shortfall in the June-September monsoon, which accounts for more than 70% of India's annual rainfall, was 24% of the 50-year average, the weather bureau said on Thursday. That compares with a 43% deficit on 11 July. The revival has eased concern that deficient rainfall will hurt farm output and boost food prices, which make up about half of India's consumer-inflation basket.
India sold Rs.14,000 crore of bonds at an auction on Friday, including Rs.7,000 crore of new 10-year debt. The bonds due 2024 were set a coupon rate of 8.40%, according to a statement from the central bank.
Foreign funds were net buyers of $517.7 million of local company and government debt on Thursday, their biggest single-day purchase since 6 June, exchange data showed on Friday.
LIveMint
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
--
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