Category: Market Update

“Risk Aversion Mode” is on amongst Debt Mutual Funds

Having witnessed a series of defaults including IL&FS, DHFL etc – debt mutual funds over the past eighteen months have been steadily increasing their exposures to government/quasi government entities. This trend has accelerated post the Franklin fiasco and Covid pandemic. In June, for the first time in recent times, overall debt mutual funds exposure to Government securities as percentage of debt AUM entered into double digits. Additionally, exposure to Treasury Bills also crossed two lakh crores for the first time. […]

NSE v.s. BSE – We have a winner !

National Stock Exchange, established in 1992, launched and popularised electronic screen based trading in India. Ever since then Bombay Stock Exchange – Asia’s oldest stock exchange, has been ceding space in equity markets to NSE. This is despite the fact that BSE has almost thrice the number of companies listed on its platform as compared to NSE (as on Apr 2020, BSE had 5542 companies listed while NSE had 1961 companies listed in equity cash platform). Graph depicting annual trading […]

Credit Debt Funds get a breather from redemptions

Credit risk category mutual funds saw a steady decline in their assets under management last fiscal as the AUM decreased from INR 81,000 Crs at the beginning of FY 20 to almost INR 55,000 Crs by the end of the fiscal year. The Franklin fiasco exacerbated the trend and the AUM fell sharply to INR 36,000 Cr by end of April and further fell to INR 30,000 Cr by end of May. However, in what would be as a sigh […]

Spread between one year and ten years bond remains at decade high : Operation Twist ?

Past three months have seen the yields on short tenor papers (~ one year) crash by almost 125 bps while the yields for long tenor bonds haven’t seen a commensurate decrease. Yields on these longer tenor 10 year bonds have reduced by ~40 bps only. This has resulted in spreads between one year and ten years paper reaching levels last observed in 2010( as depicted in below chart). The tenor spread has remained over 200 bps consistently for the past […]

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