NIFTY 50 Index weekly options and Indian Bond Market

The national stock exchange (NSE) is launching Nifty 50 index weekly options. The launch comes on the back of success in launching weekly options in the equity derivative segment of NIFTY Bank index and the currency derivatives segment in the dollar-rupee currency pair. Read the attached report on Twitter here.

Indian bond market has seen some welcome recommendations to make the corporate bond market more vibrant. Crisil estimates that corporate bonds outstanding has increased 1.36 times but still, the Indian bond market is heavily skewed towards G-Securities. The bond market in India is very small compared to its peers globally at one-fifth of India’s GDP. Coming back to Government Securities the 10 years yield is 7.23 on the back of a renewed enthusiasm by RBI in invigorating the capital markets with a massive bond buyback through open market operations. The incremental value is close to Rs 600 bn to counter the rising liquidity crisis. The NBFC liquidity crunch highlights bank lending as a major source of funding for corporate as opposed to tapping debt capital markets. The growing shortage in corporate bonds which amounts to a whopping Rs 3-4 lakh crore can only be mitigated by bringing in structural changes in the bond market. One way would be to allow higher participation by foreign investors in corporate bonds. Higher returns from lower-rated bonds would balance the woeful performance of rupee. Making it mandatory and not nudging the best-rated companies to tap the debt capital markets sends a strong message to participants. Further, RBI could look at enhancing retail participation in the bond market through online trading. The retail participation in India (in both equity and debt capital markets) is very low as compared developed markets but this would be a step forward in boosting wider participation. More on Indian bond markets coming up.

Recommended reading Crisil yearbook on the Indian Debt Market 2018.