Bond market turns bullish during the week

Tuesday, 5 February 2019 01:01 - - {{hitsCtrl.values.hits}}

Parallel shift downward on the yield curve
Foreign buying in rupee bonds continues for a second consecutive week
Money market liquidity continues to improve
Rupee appreciates drastically

By Wealth Trust Securities

The secondary bond market turned bullish during the week ending 1 February as yields were seen deceasing on the back of continued foreign buying and renewed local buying interest, reversing an upward trend witnessed during the previous week.

Foreign buying in to Rupee bonds continued for a second consecutive week, recording an inflow of Rs. 0.92 billion for the week ending 30 January 2019 and a cumulative inflow of Rs .5.66 billion for the two weeks ending 30 January 2019. The bullish sentiment was further supported by the primary auction results, where the weighted average on the 364 day bill decreased for a sixth consecutive week to 10.69%. Similarly, significant demand for the two bond auctions saw it record impressive weighted averages of 10.85% and 11.30% respectively for the maturities of 01.08.2021 and 15.01.2027.

Considerable buying interest across the yield curve saw yields dip with the liquid maturities of 01.08.21, 15.12.23, 15.03.25, two 2026’s (i.e. 01.06.26 and 01.08.26), 15.06.27 and 01.09.28 hitting weekly lows 10.72%, 10.95%, 11.15%, 11.22%, 11.13%, 11.24% and 11.35% respectively against its previous weeks closing levels of 10.85/95, 11.32/38, 11.48/55, 11.50/60, 11.60/63, 11.60/70 and 11.62/70 reflecting a parallel shift downward of the overall curve. Meanwhile in the secondary bill market, January 2019 maturities changed hands at 10.60%. The overnight call money and repo rates averaged at 8.98% and 9.00% respectively for the week as the average overnight net liquidity shortfall in the system reduced to Rs. 111.76 billion for the week against its previous weeks of Rs. 133.12 billion. The OMO (Open Market Operation) Department of Central Bank continued to inject liquidity during the week on an overnight basis at weighted average of 9.00%. The total outstanding market liquidity shortfall improved further to Rs. 106.12 billion, recording a cumulative improvement of Rs. 70.3 billion over the past six weeks.

Rupee appreciates considerably

The rupee on spot contracts closed the week considerably higher at Rs. 176.80/10 in comparison to its previous weeks closing levels of Rs. 181.60/65 on back of continued foreign buying in Rupee bonds along with export conversions.

The daily USD/LKR average traded volume for the first four days of the week stood at $ 93.15 million.

Some of the forward dollar rates that prevailed in the market were 1 month – 177.70/10; 3 months – 179.60/00 and 6 months – 182.50/90.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.