The recent Monetary Policy Review saw Reserve Bank of India’s first rate hike in more than four years, a change in stance that saw 10 year benchmark G-sec yield almost touching the 8% mark for the first time in 3 years (since June 2015). The 10-year benchmark G-sec acts as a fair indicator of the investors’ sentiment of the Indian fixed income market. The benchmark yield has seen the steepest per year increase in yield in recent times with ~180 bps hardening since the trough of 6.18% achieved in November 2016.
Domestic debt market has been primarily dominated by Government securities. In FY17-18, the amount outstanding in Government securities reached Rs. 53.2 trillion representing a sizeable market share of ~65% in sovereign debt market (constituting G-secs, T-bills and State Development Loans) and ~45% in the entire Indian fixed income market. With an average ~30% share of secondary market trades in the Indian G-sec market, the ‘on-the-run’ 10-year benchmark G-sec represents the most liquid maturity segment of the G-Sec market.
The NIFTY 10-year Benchmark G-Sec Index captures the price change and accrued interest of on-the-run 10-year G-Sec. Additionally, NIFTY 10-year Benchmark G-Sec (Clean Price) Index captures only the price change of ‘on-the-run’ 10-year G-Sec.
Exhibit 1: Performance of NIFTY 10-year Benchmark G-sec index during various phases
*Data ended June 7, 2018
#Returns reported during Phase 3 are absolute returns for the 5 month period from August 2008 to December 2008.
“BANKS ARE TOO BIG TO FAIL”, is it a myth ?
The non-performing assets (NPA) of the Indian banks are higher, by manifold, than those of banks in most major economies, including the US, UK, China, and Japan.
Conceptualised by: Prasun Banerjee
Meaning: Tailgating is not to be confused with the practice of insider trading which is illegal, while tailgating is unethical.It should also not be mistaken with front-running which is also an illegal activity that occurs when the practitioner uses the investment information the client provided and performs the trade for himself before doing so for the client.