Bonds and liquidity:
- The yield on the 10-year benchmark 6.97% 2026 paper settled at 6.4-6.5% on December 9 , moving up from 6.2% prior to the RBI policy announcement. The firming of bond yields was driven by the unexpected pause in policy rate cut by the RBI and the rate hike by the US Federal Reserve with indication of faster rate hikes in 2017.
- Consequently, Indian bond prices have declined lately, adjusting for the gains registered prior to the RBI policy review on expectations of a rate cut. However, bonds received some support after the RBI announced that the incremental CRR requirement would be withdrawn with effect from Dec. 10.
- Sentiment remained subdued in the second half of the week ahead of the FOMC policy announcement and the domestic weekly debt sale. In the auction, the RBI sold the 6.84% 2022 paper, the 6.97% 2026 paper, the 7.73% 2034 paper, and the 6.62% 2051 paper for a total notified amount of Rs14,000 crore.
- Liquidity comfortable: The inter-bank call money rate settled at 5.80% on Dec. 9 as against 6% on Nov. 18 despite
demand on account of outflows related to indirect tax and advance tax payments.
For More Details Visit us @ http://www.tradebizzindia.com/freetrial.php
Give a missed call at “09707221221”
Outlook and strategy:
- The surprise move by the RBI to maintain status quo on policy rates led to a sell-off in Indian bonds, pushing up the yield on the 10-year government bond.
- Liquidity continues to be comfortable.
- Consumer inflation came in at a two-year low, aided by lower food prices while the industrial activity remained subdued.
View: We believe that yields would continue to trade with a soft bias and that there is room for the RBI to cut rates in the coming months, given the fallout of demonetisation on consumption and overall economic activity.
Strategy: We would suggest a mix of 70:30 allocation between Short- term/Accrual and Duration funds (largely Dynamic/Medium-term funds)
Continued market volatility, the Sensex and Nifty in the red
ReplyDeleteWeak global cues and sluggish business in the Asian market is seeing a decline in the domestic market. Currently, with the index 75 points lower at 25 904 trades. 21 points, while the Nifty is trading at the level of 7957, with weakness.
Midcap and Smallcap stocks have seen a mild decline. The BSE Midcap Index fell 0.36 per cent to 0.12 percent while the BSE Smallcap Index rolled. The Nifty Midcap 100 index recorded a decline of 0.31 percent.
The index declined 19.61 points at 25959.99, and the Nifty opened at 7972.50, with 6.6 points of weakness.
What stocks
Asian Paints, Reliance Industries, Infosys, ICICI Bank and Sun forma stocks gained.
What stocks fall
ITC, HDFC, Tata Motors, M & M, Adani Ports, L & T and Maruti Suzuki stocks under pressure.
The US market fell
Business Thursday, the three indices closed in the US. The weakness of the market, failed to reach the level of Dow 20,000. Thursday's trading session 23.08 points, or 0.12 per cent, the Dow Jones closed at 19918.88.
For More Market Updates Click & visit here Monetary Solution or call @ 8818884090.