Demand for Indian bonds likely to pick up: Barclays

On 26 April, the government securities (G-Sec) rose on good buying support from banks and corporates.

hidden April 28, 2013 16:19:13 IST
 Demand for Indian bonds likely to pick up: Barclays

New Delhi: The demand for Indian bonds is likely to pick up in the coming days in the wake of declining commodity prices and rationalised debt limits for foreign investors, according to a Barclays report.

While the foreign demand for Indian government bonds has been subdued in the past few weeks, the demand is likely to pick up in the run up to the RBI's 3 May policy meeting, Barclays said.

Moreover, the auction results on 22 April, also indicate that the improving macro fundamentals (in particular in the wake of declining commodity prices) and rationalised debt limits have been welcomed by foreign investors, Barclays said.

On 22 April, Rs 29,108 crore worth of government debt was auctioned to foreign investors. This was the first auction after market regulator SEBI simplified the FII rules.

"Recent developments-the downside surprise in March WPI inflation, the decline in commodity prices and its positive impact on inflation and India's twin deficits, and the sharp decline in March trade deficit-should help to extend the rally in Indian government bonds," Barclays said.

In addition, the weakening of the Japanese Yen and the "portfolio effect" of the Bank of Japan's monetary stimulus are also likely to result in inflows into emerging market assets.

Barclays further noted that most of the inflows are likely to go to high-yielding Eastern Europe, Middle East, and Africa and Latin America local currency bonds, while Asian assets are likely to witness a marginal increase in flows.

Out of the Asian assets, flows are likely to go into high-yielding Indian and Indonesia bonds, strengthening the case for extension of Indian government bonds rally, Barclays said.

On 26 April, the government securities (G-Sec) rose on good buying support from banks and corporates.

The 8.15 percent G-Sec maturing in 2022 surged to Rs 102.60 from Rs 102.42 on Friday, while its yield went down to 7.74 percent from 7.77 percent.

PTI

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

'Don't intend to retract tweet or apologise': Kunal Kamra on contempt of court proceedings against him
India

'Don't intend to retract tweet or apologise': Kunal Kamra on contempt of court proceedings against him

In a letter posted on Twitter, the stand-up comedian also wished to volunteer the time that would be allotted to the hearing of his contempt case to other matters and parties who have not been as lucky and privileged as him to 'jump the queue'

Tata Literature Live! 2020: Ruskin Bond conferred with Lifetime Achievement Award for his prolific literary career, 'childlike wisdom and clarity'
Arts & Culture

Tata Literature Live! 2020: Ruskin Bond conferred with Lifetime Achievement Award for his prolific literary career, 'childlike wisdom and clarity'

The online ceremony was followed by a dialogue between festival director Anil Dharker, Bond and Bhardwaj in which the speakers tackled several topics including the writer's creative process, the filmmaker's adaptations of Bond's works and how a short story unfurls as a full length feature film.

Strategy to finance climate battle by reducing emissions laid out by UN envoy Mark Carney
World

Strategy to finance climate battle by reducing emissions laid out by UN envoy Mark Carney

Making companies accountable for their impact on the planet is the first step in reducing emissions, the envoy said.