India Bond Auction, Yields Rise

123jump.com Staff
07 Aug, 2009
New York City

Indian government carried out its $2.5 billion bond auction and plans to raise $60 billion in the next four weeks ahead of corporate borrowing season. Five-year and ten-year bonds dropped as yields hovered at 6.82% and 7% respectively. The bank employees commenced two-day strike.

[R]6:00 PM Mumbai, 8:30 AM New York – Indian government carried out its $2.5 billion bond auction and plans to raise $60 billion in the next four weeks ahead of corporate borrowing season. Five-year and ten-year bonds dropped as yields hovered at 6.82% and 7% respectively. The bank employees commenced two-day strike.[/R]

Stock market trading was weak as bank employees started a two-day strike and government conducted its bond auction.

Nearly 900,000 employees of private and public sector banks are asking for higher pay and pension contribution. Several unions of public sector banks are also demanding jobs for family members.

The ten-year bond due in 2019 yielding 6.9% issued by the government dropped in the early trading. The yield jumped to 7.13% and closed at 7.03%. Yield on 5-year bonds closed at 6.82%.

The Reserve Bank of India did not release the bid-to-cover ratio of the auction.

The Indian government is scheduled to complete its weekly auction of 12,000 crore rupees for the next four weeks ending on September 4. The government is looking to raise as much as 290,000 crore rupees ($60 billion) by the end of the first half of the current fiscal year ahead of heavy borrowing by the private sector in the second half.

Indian government is looking to raise 450,000 crore rupees ($98 billion) in the current fiscal year to fund its stimulus driven budget.

The Sensex index in India 353.79 or 2.28% to 15,160.24 and CNX Nifty index slid 104.10 or 2.27% to 4,481.40. Among the Sensex 30 stocks, 27 declined and 3 gained.

On BSE trading, 743 stocks advanced, 1,921 declined and 78 were unchanged.

The public offering of NHPC Ltd received interests for three times the offer size on the first subscription day. The company received 539.90 crore shares compared to the issue size of 167.7 crore shares. NHPC is planning to raise Rs 6,040 crore at the upper end of the issue price range of Rs 36.

The NHPC Ltd is the first public offering of a government controlled company in eighteen months.

Gainers & Losers

Anant Raj Industries dropped 7.33% to Rs 117.50 extending losses for the third consecutive day after the stock surged over 42% in the preceding two weeks.

Ashok Leyland declined 2.81% to Rs 32.80 extending losses for the fourth consecutive day on poor sales in July 2009.

Dewan Housing Finance Corporation gained 1.9% to Rs.133 a unit of the company will float a private equity fund in joint venture with a fund based in the U.S.

Federal-Mogul Goetze (India) was locked at the 5% upper limit at Rs 88.90 on better than expected results.

Godrej Consumer Products rose 1.15% to Rs 219.10 after the chairman in a television interview confirmed that it is exploring international acquisitions.

Hindustan Zinc declined 2.30% to Rs 710.

Indiabulls Financial Services plunged 5.4% to Rs 189.40 after a block deal of 62.50 lakh shares was executed on NSE at Rs 187.95 per share.

Jagran Prakashan surged 6.6% to Rs 94 after a block deal of 9.50 lakh shares was executed on NSE at Rs 89.05 per share.

Lupin rose 3.4% to Rs 965.75 on the expectations of new product launches in the U.S. market.

OnMobile Global rose 1% to Rs 512 and recently the stock had been volatile after the earnings release.

Tata Power Company rose 0.4% to Rs 1,291 after media reports suggested that the company is planning capital expenditure of Rs 23,600 crore for the next three years to expand generation capacity.

Tata Steel gained 1.7% to Rs 462.40 after chief financial officer Koushik Chatterjee said on Thursday the company plans to cut costs of 900 million pounds in the current fiscal year at UK based Corus. Tata Steel acquired Corus at the height of recent economic bubble.

Wipro rose 1.2% to Rs 504.10.

HDFC Bank declined 1.5% or Rs.21.25 to Rs.1,392.50, ICICI Bank fell 3.6% or Rs.27.70 to Rs.738.05 and State Bank of India fell 3.0% or Rs. 55.35 to Rs.1,741.85.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 24.00 or 0.23% to 10,412.09, Hang Seng index in Hong Kong decreased 523.87 or 2.51% to 20,375.37 and CSI 300 index in China lower 108.02 or 2.95% to 3,555.10. ASX 200 index in Australia decreased 26.90 or 0.62% to 4,299.40. The FTSE Bursa KL Composite index in Malaysia closed higher 0.91 or 0.08% to 1,184.88.

The Kospi Index in South Korea increased 10.96 or 0.70% to close at 1,576.00. SET index in Thailand closed lower 5.01 or 0.77% to 644.20 and JSE Index in Indonesia decreased 10.84 or 0.46% to 2,349.13. The Sensex index in India decreased 353.79 or 2.28% to 15,160.24.