Corporate bond trading volume soars 17% in July   

August 5, 2010

 Volumes climb to Rs63,782.46 crore in July compared to Rs54,404 crore in June; further upward momentum expected due to increased FII activity

According to data released by the Securities and Exchange Board of India (SEBI), corporate bond trading volumes have climbed 17% at Rs63,782.46 crore in July 2010 compared to Rs54,404 crore the month before. There were 4,446 combined trades on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and The Fixed Income Money Market and Derivatives Association of India (FIMMDA) platforms.

Total trading volumes between April-July 2010 now stand at Rs2.57 lakh crore. Private placement of bonds soared 33% in the first quarter of FY11 backed by fears of rate hikes by the Reserve Bank of India (RBI) to curtail inflation. The data for private placement of bonds for July is not available on the SEBI website yet.

Industry players feel that the volumes are likely to see continued upward momentum in the days ahead.

"There has been good Foreign Institutional Investor (FII) inflow this month in debt. Yield rates have been slightly volatile since the market has moved on both sides. Foreign banks have started building positions in corporate bond markets. It will be a regular trend that you will see from now on," said Arvind Chari, senior fund manager, Fixed Income, Quantum Mutual Fund. Net FII investments in debt stood at Rs740 crore in June.

"Usually, at the beginning of the quarter, you see many mutual funds and banks buying certificates of deposit (CDs)," said Ganti N Murthy, head-fixed income, Peerless Mutual Fund.

During the first quarter of this fiscal, companies raised as much as Rs61,344 crore via corporate bonds, up 33% from the Rs46,287 crore raised during the same period last year.

Market regulator SEBI recently allowed 14 FIIs to invest up to Rs2,000 crore in corporate bonds.
— Moneylife Digital Team