India bond yields seen little changed before RBI minutes
时间:2024-09-29 03:02:50 阅读(143)
Indian government bond yields are expected to trade largely flat in the early session on Thursday, as traders await minutes from the Reserve Bank of India‘s policy meeting due later in the day. The 10-year benchmark 7.26% 2032 bond yield is expected to be in the 7.20% to 7.25% range, after closing at 7.2251% in the previous session, a trader with a private bank said.
There is absolutely no trigger for yields to move in either direction, and hence they have been unable to break 7.20% on the downside and par level on the upside since the last couple of weeks, the trader said. The minutes from the Monetary Policy Committee meeting will come after market hours and will provide clarity on the central bank’s stance on interest rates.
India’s retail inflation for March was at 5.66%, falling below the RBI’s upper tolerance level of 6% for the first time in 2023 and the lowest since December 2021.Traders also said that bond yields are not falling due to selling pressure from state-run banks as they continue to book profits. These banks are likely to wait for government bond prices to drop before rebuilding positions.
Banks have been offloading notes over the past month to book profits, following a price rally led by hopes of a policy pivot by local and U.S. central banks, traders said. Meanwhile, the 10-year U.S. yield continues to trade around 3.60% levels as odds of a rate hike by the Federal Reserve on May 3 have risen to around 86%. The current target range is 4.75%-5.00%, up from near zero in March 2022.
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- ack of strong growth and continued high inflation in US is a cause for concern for equity markets, given the gap between bond yields and earnings yields for the US market.”
However, he believes that the impact on the Indian market is going to be temporary since there could be some short-term impact on flows into Indian equity markets. But since the Indian economy is on a strong wicket and will continue to remain resilient.
“Improved fiscal situation, controlled current deficit, stable interest scenario combined with good corporate earnings should lead to limited impact on the Indian bond market and equity market too,” he added.
The midcap and smallcap indices took a bigger knock with the BSE MidCap fell 2.51%, while BSE SmallCap index dived 4.18%. According to Amnish Aggarwal, head, research, Prabhudas Lilladher, the valuations were already high and some correction was expected. “If the situation sustains as it is then further correction can’t be ruled out,” Aggarwal said.
Telecommunication and industrials indices were the top laggards with BSE Telecommunication declining 3.82%, followed by BSE Industrials falling 3.26%. JSW Steel (-2.99%), Tata Steel (-2.52%) and Tata Consultancy Services (-2.44%) were the top losers of Sensex.
Surprisingly, both foreign portfolio investors and domestic institutional investors were net buyers today. While, FPIs net bought shares worth Rs 252.25 crore, DIIs have purchased shares worth Rs 1,111.84 crore, as per provisional data from exchanges.
Calling this a “normal phenomena” Pankaj Pandey, head, research, ICICI Direct said, “I will not really give too much weight to a single day buying figure. Amid concerns of elevated interest rate and geopolitical tensions, in a typical market cycle, 8-10% correction is possible at any point in time.”
The brunt of geopolitical conflict, elevated interest rates and rising crude oil prices was also felt by other Asian- Pacific markets. Jakarta Composite Index lost 1.57% followed by Shanghai Composite Index and PSEi, which fell 1.47% and 0.89%, respectively. Nikkei and KOSPI declined 0.83% and 0.76%.
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