AIRLINK 72.80 Increased By ▲ 0.62 (0.86%)
BOP 5.06 Increased By ▲ 0.13 (2.64%)
CNERGY 4.33 Decreased By ▼ -0.02 (-0.46%)
DFML 30.52 Increased By ▲ 2.03 (7.13%)
DGKC 85.95 Increased By ▲ 4.65 (5.72%)
FCCL 22.35 Increased By ▲ 0.85 (3.95%)
FFBL 33.22 Increased By ▲ 0.17 (0.51%)
FFL 9.78 Decreased By ▼ -0.08 (-0.81%)
GGL 10.40 Decreased By ▼ -0.08 (-0.76%)
HBL 113.62 Decreased By ▼ -0.38 (-0.33%)
HUBC 136.20 Decreased By ▼ -3.80 (-2.71%)
HUMNL 10.03 Increased By ▲ 1.00 (11.07%)
KEL 4.66 Decreased By ▼ -0.07 (-1.48%)
KOSM 4.40 Increased By ▲ 0.02 (0.46%)
MLCF 38.35 Increased By ▲ 0.70 (1.86%)
OGDC 133.40 Decreased By ▼ -0.30 (-0.22%)
PAEL 27.40 Increased By ▲ 1.80 (7.03%)
PIAA 24.76 Increased By ▲ 0.78 (3.25%)
PIBTL 6.55 Increased By ▲ 0.07 (1.08%)
PPL 121.21 Decreased By ▼ -1.41 (-1.15%)
PRL 27.15 Increased By ▲ 0.08 (0.3%)
PTC 13.89 Increased By ▲ 0.29 (2.13%)
SEARL 60.40 Increased By ▲ 3.78 (6.68%)
SNGP 68.53 Decreased By ▼ -0.71 (-1.03%)
SSGC 10.33 Decreased By ▼ -0.01 (-0.1%)
TELE 9.05 Increased By ▲ 0.60 (7.1%)
TPLP 11.26 Decreased By ▼ -0.02 (-0.18%)
TRG 65.70 Increased By ▲ 4.49 (7.34%)
UNITY 25.25 Decreased By ▼ -0.08 (-0.32%)
WTL 1.50 No Change ▼ 0.00 (0%)
BR100 7,608 Decreased By -22.2 (-0.29%)
BR30 25,091 Increased By 100.6 (0.4%)
KSE100 72,658 Increased By 56.2 (0.08%)
KSE30 23,383 Decreased By -155.9 (-0.66%)

MUMBAI: Indian government bond yields are set to open lower on Monday after the central bank’s move to withdraw the country’s highest value currency notes could lead to an increase in banking system liquidity and improved appetite for fixed income assets.

The 10-year benchmark 7.26% 2033 bond yield is expected to be in the 6.95% to 7.01% range after closing at 7.0106% in the previous session.

The yield ended higher on a weekly basis last week, after easing in the previous four. This comes as a major surprise and for the time being, the money should flow into government securities, which will act as a major positive, the trader said.

“However, a large 2016-type rally may not be seen, as the quantum is sharply lower as compared to that period.”

On Friday, the Reserve Bank of India said it would withdraw its highest denomination 2,000 rupee note from circulation, whose value has declined to 3.62 trillion rupees ($44.27 billion), as on March 2023.

Market participants have said the withdrawal would lead to an increase in banking system liquidity, which could ultimately flow into debt investments, mainly in the shorter tenor papers.

“Core liquidity is expected to rise substantially by September 2023 due to lower currency leakage.

In the second half of fiscal 2024, core liquidity is expected to reduce as currency leakage picks-up pace, opening-up space for durable infusion of liquidity by RBI by end of FY24 (if needed),“ Gaura Sengupta, India economist at IDFC First Bank said.

India bond yields little changed amid consolidation post recent drop

Last week, the RBI approved a surplus transfer of 874.16 billion rupees to the government for the fiscal year ended March, which was higher than the previous year but lower than market expectations.

Meanwhile, constantly rising US yields may limit the fall in longer duration local bond yields.

US yields rose after the recent commentary from Federal Reserve officials that inflation did not appear to be cooling fast enough to allow the Fed to hit a pause in its rate-hiking campaign.

Comments

Comments are closed.