WDM turnover at 12-mth low

The turnover in the wholesale debt market (WDM) sgement of the National Stock Exchage (NSE) fell to a 12-month low of Rs 61,499 crore in February, 2004. The turnover stood at Rs 54,986 crore during March, 2003.

The sedate bond prices, after the credit policy in October 2003, has been taking its toll on the WDM turnover. In February, 2004, the WDM turnover declined 8.17 per cent to Rs 61,499 crore from Rs 66,974 crore recorded in February, 2003.

The slide started immediately after the credit policy was announced. The WDM turnover declined 38.8 per cent in November 2003 after seeing a record growth in the previous seven consecutive months.

The WDM turnover declined 28.42 per cent in December, 2004 over December, 2003 and further by 44.51 per cent in January, 2004.

In February, 2004, the prices of all major government securities declined from their January, 2004 levels in the WDM segment.

The avaerage fall in prices was 0.52 per cent on a month-on-month basis, translating into a 6 per cent decline on an annualised basis, ranging between a low of 0.07 per cent and a high of 1.22 per cent.

The average yield of the government securities moved up by seven basis points from the average of 5.38 per cent in January, 2004 to 5.44 per cent in in February, 2004.

The RBI reports on Currency and Finance for 2002-03, wherein the central bank called for careful monitoring of inflation, dampened the spirits of the market.

The declaration that the US Federal Reserve would be "patient" before initiating rate hikes, did nothing to assuage the market sentiment. As a result, the yield curve registered an upward shift of 5-17 basis points.

The benchmark 10-year paper ended the month at 5.26 per cent from 5.19 per cent at the end of January, 2004. The price of 10-year benchmark security declined 0.54 per cent to Rs 116.40.

The yield of five-year paper rose by around six basis points as its price declined 0.49 per cent to Rs 131.07. The 11.03 per cent 2012 paper suffered a 1.22 per cent fall in prices and its yield moved up by 17 basis points to 5.39 per cent.