Private Banks Make Largest Single-Day Govt Bond Purchase Worth Rs 83.43 Billion In 7 Years

On Friday, Indian private sector banks purchased the largest amount of government bonds in a single session in seven years. According to statistics from Clearing Corp of India, these banks made the largest bond purchase since Nov. 15, 2016, for a net amount of 83.43 billion rupees ($1 billion).After net sales of 101 billion rupees in October, this drove overall purchasing to above 200 billion rupees for November, as reported by Reuters.

According to traders, a major corporation probably purchased the benchmark paper for about 50 billion rupees via a private sector bank.

"Though Friday's purchase consists of buying for a constituent client, private banks have been increasing purchases for their own books as they hold a chunky share of maturing papers, and this money needs to deployed," a senior treasury official at a private bank informed Reuters.

Over the course of the next month, inflows of about 1.7 trillion rupees are anticipated as the 8.83% 2023, 4.56% 2023, and 7.68% 2023 papers mature.

Commenting on the news, Mr. Edul Patel, CEO & Co-Founder, Mudrex said "This has been the largest single-session government bond purchase since 2016, and given the improving macroeconomic conditions, this move was on the cards. Added to this is the fact that these private banks are expecting about INR 1.7 trillion coming in from the large chunk of maturing papers they're holding, driving buying sentiment to its peak. This is a sharp U-turn from October, when we saw net sales of INR 101 billion."

Murthy Nagarajan, Head - Fixed Income, Tata Asset Management said the largest single-day govt bond purchase happened may be against 1 lakh of g sec maturity which is happening this month and replacement demand of some PSUs.