Halister News

(Bloomberg) -- India’s banking system cash deficit of around 500b rupees ($7.5b) from a surplus of over 1t rupee is a primary cause for the stall in bond rally, Harihar Krishnamoorthy, treasurer at FirstRand says.

• “The market was also expecting more front-loaded OMO purchases by the RBI which hasn’t happened yet,” says Krishnamoorthy
• NOTE: RBI bought 100b rupees of bonds yesterday, its first such purchase since early Sept.; bids tendered amounted to 516.6b rupees, five times the scheduled amount
• Low cutoff prices and the high amount tendered at OMO reflect the negative sentiment: FirstRand
• Foreigners have not been buying India bonds at lower yields
• NOTE: Foreign funds have been net sellers of rupee debt in Oct. to tune of 54.2b rupees so far
• Yield on 10-year bond at 6.77%, levels seen before RBI’s rate cut on Oct. 4