(Bloomberg) – Sovereign bonds in India have reached their highest level in over ten years and stocks have fallen the most since 2015 against a background of increasing risks to the country’s financial system and a fall in crude which has resulted in a panic sale of risk assets worldwide. .
The 10-year benchmark debt yield fell below 6% for the first time since 2009. It ended down 12 basis points to 6.07%. The main stock index, S&P BSE Sensex, fell 5.2% to 35,634.95, marking its sharpest drop since August 2015. The rupee weakened to its historic low.
Oil markets collapsed by more than 30% on Monday after the disintegration of the OPEC + alliance sparked a price war between Saudi Arabia and Russia that should give RBI more room to cut rates. Last week, the central bank took control of the besieged Yes Bank Ltd., heightened the risk climate fueled by the spread of coronavirus cases in India.
“The conditions for recession are emerging globally and India cannot stay away from it,” said Naveen Singh, head of fixed income securities at ICICI Securities Primary Dealership Ltd. in Mumbai. “Prepare for a strong reaction from the government and the Reserve Bank of India.”
The fall in India’s stock markets is due to global factors, and the government sees no immediate need for measures to stabilize the markets or the economy, Economic Affairs Secretary Atanu Chakraborty said on Monday. The impact of the coronavirus and the drop in oil have led to market volatility, said a spokesperson for the Securities and Exchange Board of India.
Still, the foreclosure of Yes Bank continued to spill over with IndusInd Bank pulling a bond sale, citing weak market conditions.
The rupee fell 0.5%, as losses were offset by falling crude prices and suspicious dollar sales by state banks on behalf of the central bank. It was down 0.4% to 74.0850 for the dollar from 5 p.m. in Mumbai, not far from the record low of 74.4825 observed in 2018.
The Reserve Bank of India cut interest rates five times in 2019 to support an economy that was heading for its weakest expansion in 11 years, but has been on a hiatus since December following a spike in inflation. Nomura Holdings Inc. now expects two rate cuts of 25 basis points each at the April and June meetings from its previous call for a 25 basis point drop in the second quarter, it said. he said in a note Friday.
“The weak sentiment, mainly due to concerns over the virus epidemic, has prompted foreign investors to sell their shares persistently while local purchases have not caught up. It seems exaggerated, but the calm will only come back when we start to see the world in control of the spread of the epidemic or the feeling that it has peaked and will now decrease, “said Dharmesh Kant, director of research, Indianivesh Securities Ltd.
– With the help of Ishika Mookerjee and Nupur Acharya.
To contact the reporter on this story: Subhadip Sircar in Mumbai at [email protected]
To contact the editors responsible for this story: Tan Hwee Ann at [email protected], Anto Antony, Jeanette Rodrigues
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(Bloomberg) – Sovereign bonds in India have reached their highest level in over ten years and stocks have fallen the most since 2015 against a background of increasing risks to the country’s financial system and a fall in crude which has resulted in a panic sale of risk assets worldwide. .
The 10-year benchmark debt yield fell below 6% for the first time since 2009. It ended down 12 basis points to 6.07%. The main stock index, S&P BSE Sensex, fell 5.2% to 35,634.95, marking its sharpest drop since August 2015. The rupee weakened to its historic low.
Oil markets collapsed by more than 30% on Monday after the disintegration of the OPEC + alliance sparked a price war between Saudi Arabia and Russia that should give RBI more room to cut rates. Last week, the central bank took control of the besieged Yes Bank Ltd., heightened the risk climate fueled by the spread of coronavirus cases in India.
“The conditions for recession are emerging globally and India cannot stay away from it,” said Naveen Singh, head of fixed income securities at ICICI Securities Primary Dealership Ltd. in Mumbai. “Prepare for a strong reaction from the government and the Reserve Bank of India.”
The fall in India’s stock markets is due to global factors, and the government sees no immediate need for measures to stabilize the markets or the economy, Economic Affairs Secretary Atanu Chakraborty said on Monday. The impact of the coronavirus and the drop in oil have led to market volatility, said a spokesperson for the Securities and Exchange Board of India.
Still, the foreclosure of Yes Bank continued to spill over with IndusInd Bank pulling a bond sale, citing weak market conditions.
The rupee fell 0.5%, as losses were offset by falling crude prices and suspicious dollar sales by state banks on behalf of the central bank. It was down 0.4% to 74.0850 for the dollar from 5 p.m. in Mumbai, not far from the record low of 74.4825 observed in 2018.
The Reserve Bank of India cut interest rates five times in 2019 to support an economy that was heading for its weakest expansion in 11 years, but has been on a hiatus since December following a spike in inflation. Nomura Holdings Inc. now expects two rate cuts of 25 basis points each at the April and June meetings from its previous call for a 25 basis point drop in the second quarter, it said. he said in a note Friday.
“The weak sentiment, mainly due to concerns over the virus epidemic, has prompted foreign investors to sell their shares persistently while local purchases have not caught up. It seems exaggerated, but the calm will only come back when we start to see the world in control of the spread of the epidemic or the feeling that it has peaked and will now decrease, “said Dharmesh Kant, director of research, Indianivesh Securities Ltd.
– With the help of Ishika Mookerjee and Nupur Acharya.
To contact the reporter on this story: Subhadip Sircar in Mumbai at [email protected]
To contact the editors responsible for this story: Tan Hwee Ann at [email protected], Anto Antony, Jeanette Rodrigues
bloomberg.com“data-reactid =” 40 “> For more articles like this, visit us on bloomberg.com
Subscribe now to stay one step ahead of the most trusted source of business information. “data-reactid =” 41 “> Subscribe now to stay ahead with the most trusted source of business information.
© 2020 Bloomberg L.P.