Indian Market Snapshot By Rajesh Sharma Cmd Money Matters Financial Services Ltd.

Fixed Income

Fixed Income

Gilts:

Indian federal bond yields were unchanged on Monday as traders awaited the details of this weeks debt sale and whether the central bank would announce another round of bond purchases via open market operations. The RBI has conducted three bond purchases via OMO in as many weeks to offset the impact on rupee liquidity from its suspected interventions in currency markets. The central bank has bought a net 123.5 billion rupees worth bonds from the secondary market in the week to May 18. However traders were unsure if the RBI would conduct OMOs after repo borrowings by banks dropped to 854.25 billion rupees from 1.04 trillion rupees on Monday, and as rupee gained for a third session on Monday, recovering from last weeks record lows against the dollar. The benchmark 10Y ended the day at 8.51%. The bond is expected to move in the range 8.50-8.57%.

OIS:

Swaps remained in a tight range but slight positive risk sentiment globally prompted paying. Traders are waiting for fresh cues for taking any position. The benchmark 5Y was up 1bps at 7.49% and 1Y was steady at 8%. Swaps are expected to be range bound with 5Y trading between 7.45-7.55%.

Currency:

INR:

INR opened the day 15 p lower at 55.20 tracking risk on sentiment and saw some selling interest at open to touch the lows of 55.05. Oilers were seen buying aggressively and the pair rose sharply to 55.38. Equities closed the day up 1.23%. Exporters were seen selling aggressively in the afternoon and the pair came off to close lower at 55.19 (prev. close 55.38)

Forwards:

1y forwards opened the day 3p higher at 300/02p and saw receiving interest from interbank participants cutting paid positions. Today being NY holiday, there was no cash/tom. Exporters were seen receiving in the mid months. 1y forwards came steadily through the day to the lows of 293p. 6m closed at 167/169p (6.80%) 1yr closed at 294/296p (6.46%).

Equities:

Indian shares extended gains in afternoon trade helped by gains in Asian shares, with local gains led by financials and Reliance industries. Indian rupee was on course to clock a third session of gains, after hitting an all time low of 56.40 on Thursday. Trading may remain volatile ahead of the May month derivatives expiry on Thursday. Sensex was up 0.7% and NSE 50 was 0.71% higher.

by: Kiran K.

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