Secondary market bond yields dip for a fourth consecutive day
By Wealth Trust Securities
The bullish sentiment in secondary bond markets continued for a fourth consecutive day yesterday as yields were seen dipping across the yield curve.
Activity was witnessed from three year durations of 2017s to 15-year durations of 2029s with its yields dipping to lows of 6.60% on the 2017s, 6.92% on the 2018s, 7.09% on the 2019s, 7.65% on the 2021s, 7.80% on the 2022s, 8.08% on the 2024s and 9.00% on the 2029s.
Meanwhile in secondary bill markets, January 2015 bills were quoted at levels of 6.18% to 6.22% while May 2015 bills were at levels of 6.20% to 6.25%.
Overnight call money and repo rates remained steady to average 6.70% and 6.51% respectively as surplus liquidity stood at Rs. 27.27 b in money markets yesterday. The total surplus amount was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50% as Central Bank continued to refrain from conducting any auctions under its Open Market Operations (OMO) for a fourth consecutive day.
Rupee on spot next contrasts remain active
In Forex markets, the rupee on spot next contracts traded within a narrow band of Rs. 130.33 to Rs. 130.37 yesterday while spot contracts were seen closing the day mostly unchanged at levels of Rs. 130.28/30. The total USD/LKR traded volume for 17 September was at $ 56.55 million.
Some of the forward dollar rates that prevailed in the market were; one month – 130.87; three months – 131.62; and six months – 132.74.
Bourse at over 3-year high; more gains seen
Reuters: Stocks closed at their highest in more than three years on Thursday led by large-caps on improved sentiment due to lower interest rates, higher foreign buying and a positive economic outlook.
Stockbrokers said they expected the index to gain further.
The main stock index ended up 0.39%, or 27.70 points, at 7,206.90, its highest close since June 10, 2011.
“There is a lot of buying demand. Sellers are hiding until they get a premium price,” said First Capital Equities Ltd. CEO Jaliya Wijeratne. “We expect the index to gain further due to lower interest rates and positive outlook.”
Institutional investors were very active on Thursday, while retail participation was also high due to an optimistic outlook, analysts said.
The cut in energy prices on Tuesday also enthused the market.
Sri Lanka is aiming for a higher economic growth of 8.2% and a lower fiscal deficit target of 4.4% of gross domestic product next year, a government document showed on Thursday.
Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday.
The index has gained 21.89% so far this year.
The Bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 81.562 on Thursday compared with Wednesday’s 80.087, Thomson Reuters data showed.
Shares in Ceylon Tobacco Company, which led the overall gain in the index, rose 0.85% to Rs. 1,180, while large-cap Nestle Lanka Plc rose 1.03% to Rs. 2,100.10.
The day’s turnover was Rs. 2.9 billion ($ 22.26 million), more than this year’s daily average of over Rs. 1.25 billion.
Foreign investors were net buyers of Rs. 29 million worth of shares on Thursday, extending the year-to-date net foreign buyers of Rs. 10.91 billion.
