The first tranche of the IIBs-2013-14 for Rs1,000-Rs2,000 crore will be issued on 4th June, and the maturity period of these bonds will be 10 years
The Reserve Bank of India (RBI) today announced it will launch inflation-linked bonds every month, starting 4th June, to attract household savings of up to Rs15,000 crore this fiscal so as to discourage investments in gold.
“RBI, in consultation with the Government of India, has decided to launch Inflation indexed Bonds (IIBs),” the central bank said in statement.
The first tranche of the IIBs-2013-14 for Rs1,000-Rs2,000 crore will be issued on 4th June, it said, adding that the maturity period of these bonds will be 10 years. The total issue size will be Rs12,000-Rs15,000 crore in 2013-14.
After the first tranche, bonds will be issued on last Tuesday of every month.
While the first series of the bonds will be open for all class of investors, the second series issue—beginning October—will be reserved exclusively for retail investors.
RBI said the bonds are pursuant to the Budget proposal to “introduce instruments that will protect savings of poor and middle classes from inflation and incentives household sector to save in financial instruments rather than buy gold”.
Both the government as well as the RBI are concerned over the rising gold imports as its putting pressure on current account deficit (CAD), which widened to historic high of 6.7% in third quarter of 2012-13.
Gold and silver imports last month shot up 138%, year-on-year, to $7.5 billion.
Announcement of the bonds to discourage investments in gold is the second major move by RBI in the last three days. On Monday, it had placed restrictions on banks to import gold.
Giving details of the for first series of IIBs, RBI said while the coupon rate (interest rate) will remain fixed, the principal amount invested in the bonds will be linked to inflation based on Wholesale Price Index (WPI).
A fresh upmove has started. As a long as the indices don’t close below any previous day’s low, the market is headed higher
The market closed at its highest level since January 2011 after the RBI governor on Tuesday rekindled hopes of a cut in interest rates going ahead, on the decline in headline inflation. A fresh upmove has started. As a long as the indices don’t close below any previous day’s low, the market is headed higher. The National Stock Exchange (NSE) reported a volume of 69.48 crore shares and advance-decline ratio of 930:472.
The market witnessed a firm opening on hopes that the easing of the headline inflation might prompt the Reserve Bank of India (RBI) will cut rates in its policy meeting. Asian markets were higher in morning trade as the fall in the value of the yen boosted prospects for exporters in the region. Overnight US indices scaled fresh highs on speculations that the Federal Reserve will not withdraw its support to the economy.
The Nifty opened 24 points higher at 6,019 and the Sensex started the day at 19,798, a gain of 76 points over its previous close. The opening figures on both benchmarks were also their intraday lows.
Buying support from rate-sensitive sectors led the market to a higher trajectory as trade progressed. Gains in banking, realty, auto and capital goods led the benchmarks on a northward journey in noon trade.
The benchmarks continued to rise in the late session and hit their highs in the last half hour of trade as across-the-board buying led all sectoral gauges in the positive. The Nifty touched 6,157 and the Sensex climbed to 20,242 at their respective highs.
The market settled near their highs as hopes of a rate cut by the RBI gained momentum as governor D Subbarao on Tuesday remarked that he would take note of the fall in the inflation rate for future policy decisions.
The Nifty climbed 151 points (2.52%) to 6,147 and the Sensex surged 491 points (2.49%) to close the trading session at 20,213.
While the broader indices also closed in the positive, they underperformed the Sensex, as the BSE Mid-cap index climbed 1.58% and the BSE Small-cap index advanced 0.98%.
The broad-based rally saw all sectoral indices closing higher. The top gainers were BSE Realty (up 4.04%); BSE Bankex (up 3.95%); BSE Capital Goods (up 3%); BSE PSU (up 2.36%) and BSE Auto (up 2.29%).
Among the 30 stocks on the Sensex, 29 settled higher. The key gainers were HDFC (up 4.70%); State Bank of India (up 4.07%); Larsen & Toubro (up 3.85%); ICICI Bank (up 3.80%) and HDFC Bank (up 3.72%). Wipro (down 0.53%) was the lone loser.
The top two A Group gainers on the BSE were—UCO Bank (up 8.80%) and Punjab National Bank (up 7.49%).
The top two A Group losers on the BSE were—Amara Raja Batteries (down 2.85%) and Gujarat State Petronet (down 1.75%).
The top two B Group gainers on the BSE were—Wanbury (up 20%) and Nectar Lifesciences (up 19.96%).
The top two B Group losers on the BSE were—Remi Metals Gujarat (down 19.27%) and Emmsons International (down 18.44%).
Of the 50 stocks on the Nifty, 47 ended in the in the green. The main gainers were Punjab National Bank (up 7.60%); Reliance Infrastructure (up 5.22%); IndusInd Bank (up 5.14%); Kotak Mahindra Bank (up 5.12%) and DLF (up 4.78%). The losers were Power Grid Corporation (down 0.74%); UltraTech Cement Co (down 0.51%) and Cairn India (down 0.08%).
Markets across Asia, with the exception of the KLSE Composite index, closed higher with the Nikkei 225 rising to a five-and-half year high on a declining yen. The rest of the Asian pack closed with modest gains as concerns about the global recovery persisted.
The Shanghai Composite rose 0.35%; the Hang Seng gained 0.50%; the Jakarta Composite added 0.16%; the Nikkei 225 jumped 2.29%; the Straits Times rose 0.26%; the Seoul Composite gained 0.12% and the Taiwan Weighted surged 0.81%. Bucking the trend, the KLSE Composite lost 0.30%.
At the time of writing, the key European indices were trading higher as Bank of England governor Mervyn King that a recovery for the UK economy was within reach. At the time, the US stock futures were mixed with a positive bias.
Back home, inflows from foreign institutional investors in the equities segment on Tuesday were offset by withdrawals by domestic institutional investors. While FIIs pumped in funds totalling Rs420.99 crore, FIIs pulled out Rs412.66 crore from stocks.
Glenmark Pharmaceuticals’ US subsidiary Glenmark Generics Inc has received approval from the US health regulator to sell generic versions of AstraZeneca's Zomig and Zomig ZMT tablets, a migraine drug, in the American market. According to IMS Health, for the 12-month period ended December 2012, the products garnered annual sales of $176 million. Glenmark Pharma gained 2.53% to close at Rs562.50 on the NSE.
Tata Communications today said that it will delist its American Depository Shares from the New York Stock Exchange, due to low trading volumes. The decision to terminate its ADR programme was aided by new public shareholding norms by the Indian market regulator, SEBI. The guidelines dictate companies listed on Indian bourses to offload at least 25% of its stake to its shareholders. Tata Communications rose 0.78% to 239.20 on the NSE.
Tata Chemicals today said it has partnered with Institute of Chemical Technology (ICT) for creating an endowment chair with a donation of Rs3.5 crore to promote research in chemical engineering. The two entities would collaborate on several new initiatives such as conducting R&D programmes with a focus on sustainability, green chemistry, undertaking projects at ICT based on chemical technology related challenges. The stock advanced 0.62% to close at Rs324 on the NSE.
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