Fixed Income Insight

Monthly Update on Debt Market - July 2016 Edition

Editorial
The month of June 2016 started with sovereign bond yields @ 7.48%, thereafter it inched upwards to 7.53% on account of volatility
radiated by Brexit, inflation numbers and Dr. Rajan's decision to discontinue. However, yields recovered in the last week with FII buying
and ended at 7.44%. Accordingly, sovereign bond yield curve shifted downwards homogenously across maturities by ~8 bps. The fact
that the foreign sov bond yields have fallen more as against the domestic bond yields; offers a better yield differential. This made FIIs
pour in INR 979.66 cr through primary G-Sec Auctions in June16. In consonance with G-Sec yield curve, yields on money markets
instrument declined too. On inflation front, retail inflation remained above RBI target zone of (5.00%) and may impact future monetary
policy stance. Credit and deposits growth is reflecting subdued numbers and is a harbinger of weak economic recovery. With weak
credit, banks investment deposit ratio has increased; reflecting burgeoning interest of banks into SLR investments. Liquidity conditions
eased in June 2016 with weighted average call money rates hovering near policy rates. Globally, UK's decision to leave European Union
has emitted volatility in the market and has caused flight of capital to safer heavens.

Market Round Up June-16

G-Sec Yield: June16 started with 10 Yr GOI @ 7.48%, thereafter it continued to harden towards 7.53% amidst volatility radiated by Dr.
Rajan's decision to discontinue, BREXIT and domestic inflation numbers. However, with increasing interest differential FIIs poured in INR
9.79 bn in G-sec auctions leading 10 Yr GOI to close the month at 7.44%. Overall, FII divested INR 62.2 bn from debt market in June16.
G-Sec yield curve shifted downwards by ~8 bps homogenously across maturities in June16. The curve yet remains steeply upward sloping
with difference between 1 Yr and 30 Yr G-sec hovering ~80 bps. This difference was at ~85 bps in May16.
G-Sec auctions observed overwhelming response in last week with bids coming nearly 7 times of the auction amount. Auction yields
declined in the last week by ~2 to 10 bps across maturities. On the other hand, SDL auction cut-offs hardened by ~ 5 bps across states with
yields consolidate between 7.96% to 8.09%.
Corporate bond: AAA bond yields softened homogenously across all maturities in June16. However, the corporate bond yield curve shifted
downwards with less intensity as against the softening observed in G-Sec yield curve. Similar to G-Sec yield curve, more softening is
observed in short end segment as compared to long end segment.
Liquidity conditions eased in June 2016 with banks operating on reserve repo throughout the month. Liquidity conditions were tight during
mid May16 led by stronger than usual demand for currency and build up cash balance of the government. In order to mitigate the pressure
RBI conducted OMOs worth INR 400 bn in June16.
Credit & deposit growth are hovering near multi year lows and stood at 8.70% and 9.60% respectively in June16. First fortnight of June
2016 witnessed a net credit repayment of INR 154.80 bn to banks taking the total net credit outflow in FY17 at INR -109.4 bn against INR
1241 bn in similar period last year. During the same period, deposits increased from 1812 bn in FY16 to 2265 bn in FY17.
WPI inflation moved up to 0.79% in May16 from 0.34% in Apr16 led by a sharp uptick in primary food articles. Similarly, CPI inflation also
moved up to 5.76% in May16 from 5.39% in Apr16. Here again the up move was led by a hike in food & beverages segment prices. Non-
core (food & energy) inflation moved up to 1.37% in May16 from 0.66% in Apr16. Within non-core segment (ex food & energy) -
sugar, pulses, egg meat & fish and vegetables reported the highest contribution to inflation. Fruits basket moved from negative contributor
to positive territory in May16. On the other hand- HS Diesel, naptha, furnace oil and petrol were the highest negative contributors to
inflation.
Net State Govt. borrowings stood at INR 416.00 bn (i.e. 37.79% up on y-o-y basis). On other hand, Central borrowings stood at INR 943.90
bn (8.58% up on y-o-y basis). GoI intends to borrow ~60% of total borrowings in H1 FY16-17. Fiscal deficit in May16 reached 42.89% of full
year target. Further to this, outlay on account of Seventh Pay Commission may further aggravate the fiscal deficit situation. On the positive
side, extra tax revenue from Krishi Kalyan Cess and benign commodity prices (crude oil) may cushion fiscal deficit situation.
Globally, yields across major Advanced (AE) and Emerging economies (EMEs) softened In June16. This time the softening in advanced
economies was higher in absolute bps term against EMEs led by the flight of capital to safer heavens after BREXIT. US & UK sovereign bond
yields fell drastically by 36 & 65 bps respectively. Euro Area & Japan continues to experience negative interest rate regime and still observed
softening of 11 & 16 bps respectively.

Going Forward July 2016

While Indian economic factors reflect stability, the global environment remains vulnerable in light of the repercussions of BREXIT and
US FED policy stance. This led FII to turn net sellers into debt market to the tune of INR 62.2 bn inspite of the INR 9.79 bn fresh
investment in G-sec auctions. On food inflation, outlook looks favourable as in light of an above normal & well distributed monsoon.
Yet, the efficacy of monsoon would hinge upon water reservoir levels which are @ 15% of capacity on June16. This storage level is
lower as compared the average storage of last ten years. Overall, macros numbers should improve as IIP & WPI indices are rebased
from 2004-05 to 2011-12 by the end of 2016. Stress on liquidity & currency during Sep16 with maturing FCNR deposits would be closely
watched. Overall, yields are likely to remain range bound with upward bias in the near term subject to the developments over global
macro environment. Simultaneously, we maintain the long term softening trend visualizing policy transmission over 2H FY17 with
improvement in credit growth.

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 July 2016 Edition
Monthly Update on Debt Market

Events Calendar July-2016

Domestic International
Event Date Unit Prior Event Date Unit Prior

PMI-Manufacturing Fri, 01 Jul, 2016 Index 50.70 Nikkei PMI -Manufacturing Fri, 01 Jul, 2016 Index 47.80

Foreign Exchange Reserves Fri, 01 Jul, 2016 INR bn 24312 UK PMI-Manufacturing Fri, 01 Jul, 2016 Index 50.10

PMI-Services Tue, 05 Jul, 2016 Index 51.00 Euro - Industrial Output Fri, 08 Jul, 2016 % Y/Y 1.20%

IIP Growth Tue, 12 Jul, 2016 % Y/Y -0.84% Euro - Retail Inflation Tue, 12 Jul, 2016 % Y/Y 0.30%

Inflation - CPI Tue, 12 Jul, 2016 % Y/Y 5.76% BoE interest rate decision Thu, 14 Jul, 2016 -- 0.50%

Inflation - WPI Thu, 14 Jul, 2016 % Y/Y 0.79% US interest rate decision Wed, 27 Jul, 2016 -- 0.50%

News June-2016
Major Events- Domestic Major Events - International
> RBI kept policy rates unchanged @ 6.50% in June 2016 monetary policy meet. > FOMC kept federal fund rate unchanged @ 0.50% in June'16.
> Industrial output growth fell into negative (-0.84%) in April 2016. > Consumer prices in United States went up 1% (YoY) in May'16 led by energy cost.
> June 2016 ends with monsoon deficieny of 12%. > Deflationary pressure in China eased further @ 2.00% in May'16.
> Dr. Rajan decided to leave RBI after his term in Sep'16. > Eurozone economic sentiments imporoved further in May'16.
> WPI Inflation inches up 0.79% in May 2016. > Britain left European Union.

Global 10 Yr Sovereign Bond Yields (%)

Change Change Change Change
Emerging Economies (EME) Mar-16 Apr-16 May-16 Jun-16 Jun-15
Mar-June Apr-June May-June YoY
BRAZIL 13.88 -1.84 12.59 -0.55 12.59 -0.55 12.04 12.64 -0.60

CHINA 2.93 -0.08 2.93 -0.08 2.93 -0.07 2.85 3.64 -0.79

INDIA 7.49 -0.06 7.41 0.02 7.45 -0.02 7.43 7.89 -0.46

HONG KONG 1.41 -0.35 1.43 -0.37 1.43 -0.37 1.06 1.80 -0.74

SOUTH AFRICA 9.11 0.02 10.16 -1.03 10.16 -1.03 9.13 8.35 0.78

SOUTH KOREA 1.81 -0.32 1.81 -0.33 1.81 -0.33 1.48 2.45 -0.97

VIETNAM 6.87 0.02 6.94 -0.04 6.94 -0.05 6.90 6.78 0.12

TAIWAN 0.86 -0.10 0.87 -0.11 0.87 -0.11 0.76 1.50 -0.74

RUSSIA 9.27 -0.72 9.21 -0.66 9.21 -0.66 8.55 11.17 -2.62

Advanced Economies (AE)

EURO AREA -0.28 -0.10 -0.28 -0.10 -0.28 -0.11 -0.38 0.18 -0.56

UNITED KINGDOM 1.38 -0.42 1.61 -0.65 1.61 -0.65 0.96 2.08 -1.12

UNITED STATES 1.81 -0.35 1.82 -0.35 1.82 -0.36 1.47 2.33 -0.86

AUSTRALIA 2.50 -0.49 2.52 -0.52 2.52 -0.51 2.00 2.92 -0.92

JAPAN -0.09 -0.14 -0.08 -0.15 -0.08 -0.16 -0.23 0.42 -0.65

PIGS

PORTUGAL 2.92 0.20 3.17 -0.06 3.17 -0.06 3.11 3.05 0.06

IRELAND 0.73 0.03 0.98 -0.22 0.98 -0.22 0.76 1.67 -0.91

GREECE 8.80 -0.28 8.93 -0.40 8.93 -0.40 8.53 14.99 -6.46

SPAIN 1.44 -0.16 1.60 -0.33 1.60 -0.33 1.27 2.35 -1.08

Globally, yields across advanced and Emerging Economies (EMEs) have softened In June 2016. The sovereign bond yields in United Kingdom fell drastically from 1.38 (Mar'16) to
0.96 (June 2016), where retail inflation remained below market expectations @0.30%. To add to this, United Kingdom also decided to leave European Union (EU). Consumer
spending in UK has been solid but there is growing evidence that uncertainty about referendum is leading delays to major economic decisions as decision to leave European Union
could upset inflation trajectory and drag down the industrial output. According to economists, decision of leaving EU is not a event rather it is a process; the repercussion of this
should gradually unfold in the coming year. On the other hand, Euro Area continues to experience negative interest rate regime. Amongst Emerging Economies (EMEs), Hong
Kong's witnessed the highest fall in in bond yields amidst declining inflation scenario. Inflation in HongKong declined and stood at 2.6% as against 2.70% in the previous month led
by basic foodstuff and housing rental component. It is the lowest inflation reading recorded since January 2016.
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 July 2016 Edition
Monthly Update on Debt Market

Domestic Macros
Change Change Change Change
Indicator Mar-16 Apr-16 May-16 Jun-16 Jun-15
Mar-June Apr-June May-June YoY
Repo Rate 6.75% -0.25% 6.50% 0.00% 6.50% 0.00% 6.50% 7.25% -0.75%

Reverse Repo Rate 5.75% 0.25% 6.00% 0.00% 6.00% 0.00% 6.00% 6.25% -0.25%

Cash Reserve ratio (CRR) 4.00% 0.00% 4.00% 0.00% 4.00% 0.00% 4.00% 4.00% 0.00%

Statutory Liquidity Ratio (SLR) 7.75% -0.75% 7.00% 0.00% 7.00% 0.00% 7.00% 8.25% -1.25%

Deposit Growth 10.60% -1.00% 10.10% -0.50% 9.80% -0.20% 9.60% 11.70% -2.10%

Credit Growth 11.50% -2.80% 10.40% -1.70% 9.80% -1.10% 8.70% 9.80% -1.10%

Credit-Deposit ratio 77.06% -1.29% 76.05% -0.28% 76.01% -0.24% 75.77% 75.99% -0.22%

Incremental Credit Deposit Ratio 81.54% -86.37% 4.40% -9.23% 1.64% -6.47% -4.83% 50.36% -55.19%

Investment Deposit Ratio 29.03% -0.22% 28.25% 0.56% 28.43% 0.38% 28.81% 30.13% -1.32%

Incremental Invs - Deposit Ratio 27.36% 28.65% 31.98% 24.03% 40.58% 15.43% 56.01% 64.00% -7.99%

Cash Deposit Ratio 4.77% -0.08% 4.81% -0.12% 4.78% -0.09% 4.69% 4.77% -0.08%

CRR Holding 4.76% -0.72% 4.78% -0.74% 4.40% -0.36% 4.04% 4.81% -0.77%
SLR Holding 28.58% 0.21% 27.88% 0.91% 28.54% 0.25% 28.79% 29.71% -0.92%

WPI Inflation 0.45% -- 0.34% -- 0.79% -- -- -2.13% --

CPI Inflation 4.83% -- 5.39% -- 5.76% -- -- 5.40% --

IIP Growth 0.30% -- -0.84% -- -- -- -- 4.24% --

FII Debt Inflows (INR Bn) 18.14 -80.34 64.18 -126.38 -44.09 -18.11 -62.20 17.37 -79.57

91 Day T Bills 7.13% -0.40% 6.78% 6.82% -0.09% 6.73% 7.45% -0.72%

182 Day T Bills 7.10% -0.29% 6.83% -0.02% 6.91% -0.10% 6.81% 7.51% -0.70%

365 Day T Bills 7.06% -0.19% 6.88% -0.01% 6.93% -0.06% 6.87% 7.58% -0.71%

N.A = Data not released yet

Domestic Macros: Credit & deposit growth are hovering near multi year lows and stood at 8.70% and 9.60% in June 2016 taking the total credit deployment
of this fiscal into negative. First fortnight of June 2016 witnessed a net credit repayment of INR 154.80 bn to banks taking the total net credit outflow in FY17
at INR -109.4 bn against INR 1241 bn in similar period last year. During the same period, deposits increased from 1812 bn in FY16 to 2265 bn in FY17. Banking
system is witnessing low deposit growth which limits to re-adjust the cost on deposit portfolio in order to protect margins. Moreover, with new method of
lending (MCLR); banks may face difficulty in protecting Net Interest Margins (NIM). Incremental investment deposit ratio has seen a continuous improvement
in absence of credit deployment; it increased from 27.36% (Mar'16) to 56.01% (June'16) reflecting that banks are investing more in SLR in lieu of inspite of
weak credit numbers. Foreign portfolio investors turned out to be net sellers in G-Sec market and drew funds to the tune of INR 62.20 bn.

Credit and Deposit Growth

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 July 2016 Edition
Monthly Update on Debt Market

G-Sec Auction Details June-2016

3-Jun-16 YTM Amt (INR-Cr.) 10-Jun-16 YTM Amt (INR-Cr.) 24-Jun-16 YTM Amt (INR-Cr) 30-Jun-16 YTM Amt (INR-Cr.)

7.68% Govt. Stock 7.80% Govt. Stock 7.35% Govt. Stock 7.68% Govt. Stock
7.6121% 3000 7.4628% 3000 7.6123% 3000 7.5279% 3000
2023 2021 2024 2023

7.59% Govt. Stock 7.59% Govt. Stock 7.61% Govt. Stock 7.59% Govt. Stock
7.4966% 8000 7.7148% 8000 7.6747% 8000 7.4514% 8000
2026 2029 2030 2026

7.73% Govt. Stock 7.50% Govt. Stock 7.73% Govt. Stock, 7.50% Govt. Stock
7.7654% 2000 7.7700% 2000 7.7605% 2000 7.6929% 2000
2034 2034 2034 2034

8.13% Govt. Stock 8.17% Govt. Stock 8.13% Govt. Stock 7.72% Govt. Stock
7.8363% 2000 7.8651% 2000 7.8296% 2000 7.7496% 2000
2045 2044 2045 2055

Benchmark 10 Yr G-Sec Yield Movement (Semi Ann) G-Sec Yield Curve (Semi Ann)
Daily Yield Movement in the Past Year Yield Curve Movement - MoM & YOY

Benchmark 10 Yr G-Sec Yields: June16 started with 10 Yr GOI @ 7.48%, thereafter it continued to harden towards 7.53% amidst volatility radiated by Dr. Rajan's decision to discontinue, BREXIT and
domestic inflation numbers. However, with increasing interest differential FIIs poured in INR 9.79 bn in G-sec auctions leading 10 Yr GOI to close the month at 7.44%. The downward shift in sovereign
bond yields was homogeneous by ~8 bps across all maturities. The curve yet remains steeply upward sloping with difference between 1 Yr and 30 Yr G-sec hovering ~80 bps. This difference was at ~85
bps in May16. G-Sec auctions observed overwhelming response in last week with bids coming nearly 7 times of the auction amount. Auction yields declined in the last week by ~2 to 10 bps across
maturities.

SDL Auctions Summary June-2016

Cut-off
Date State Tenure (Yrs) Amt (Crs) Cut-off Yield (%) Date State Tenure (Yrs) Amt (Crs)
Yield (%)

14-Jun-16 Andhra Pradesh 10 1500 8.09 14-Jun-16 West Bengal 10 2000 8.09

14-Jun-16 Gujarat 10 1000 8.05 28-Jun-16 Goa 10 100 7.98

14-Jun-16 Jammu & Kashmir 10 500 8.05 28-Jun-16 Haryana 10 1000 7.98

14-Jun-16 Kerala 10 1000 8.07 28-Jun-16 Kerala 10 500 7.98

14-Jun-16 Maharashtra 10 2500 8.08 28-Jun-16 Maharashtra 10 2500 7.96

14-Jun-16 Mizoram 10 50 8.05 28-Jun-16 Odisha 10 700 8.00

14-Jun-16 Punjab 5 1000 7.99 28-Jun-16 Telangana 10 1500 7.97

Uttar
14-Jun-16 Rajasthan 10 1500 8.07 28-Jun-16 10 1000 7.99
Pradesh

14-Jun-16 Sikkim 10 200 8.04

14-Jun-16 Tamil Nadu 10 1875 8.07

14-Jun-16 Tripura 10 250 8.05

Uttar
14-Jun-16 10 1000 8.08
Pradesh

14-Jun-16 Uttarakhand 10 500 8.06

SDL Bond Yields : The yields of state development loans (SDL) have hardened albeit at a tepid pace in the month of June 2016 but it remained in the narrow range of range of 7.97% - 8.09%. Cumulatively, 18
States have raised funds amounting Rs. 22,175 Crores in June 2016 as compared to INR 18,525 Crores being raised by 11 States in the previous month. SDL of West Bengal and Andhra Pradesh have the highest
yield of 8.09% whereas Maharashtra ticked the lowest yield of 7.96%. The yield of Andhra Pradesh's SDL observed the highest hardening of 8 bps while Telangana's SDL yield observed the softening of 5 bps. Goa's
SDL yield did not witness any change and stood at 7.98%. The average cost of borrowings have increased from 8.00% (May'16) to 8.03% (June'16). Nineteen (19) states so far have given the consent ot UDAY
scheme ; 10 states have formally joined the scheme. Cumulatively, bonds worth ~INR 1,43,694 crores were floated by participating states.

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 July 2016 Edition
Monthly Update on Debt Market

Yield Across Categories June-2016

Rating PSU Basel III Tier I Private

AAA 8.15% -- 8.27% -- 8.45% -- 9.10%

AA+ 8.40% -- 8.65% 9.10% -- 9.15% 8.70% -- 9.25%

AA 8.50% -- 8.70% 9.50% -- 9.55% 9.40% -- 10.50%

Primary Market Activity Report- 2016-17

Issuer Segment Wise Details (INR Cr) Top Issuer Wise Details (INR-Crores)
Issuer Type No. of Issuers Total Amount Top Issuers Amount Top Issuers Amount Top Issuers Amount
SANMAR
All India Financial Institutions 48 4,181,225 HDFC 1,147,000 CANARA BANK 300,000 165,600
ENGINEERING
KOTAK
State Financial Institutions 1 25,000 ICICI BANK 650,000 RELIANCE JIO 300,000 162,920
MAHINDRA
Public Sector Undertakings 5 811,850 PFC 624,300 AXIS BANK 243,000 EXIM 161,000
CHOLAMANDA ADANI
State Level Undertakings 0 - NABARD 474,000 239,000 158,000
LAM TRANSMISSION
INDIABULLS
Private Sector 294 3,290,171 LIC 403,200 NTPC 207,250 143,400
HOUSING
Total (INR Cr) 348 8,283,246 PGCIL 399,600 ONGC 200,000 TATA MOTORS 133,900

Corporate Bond Issuances : The above table reflects Crporate bond issuances in FY 2016-17 till date. It also details the amounts raised by top entities in this financial year.

FIMMDA - AAA Corporate Bond Spreads Bond Issuances - June-2016

Corporate Bond Spreads with Gsec Issuer Amt (Cr) Rating Coupon Tenure (mth)
Private Issuer

HDFC Limited 760 AAA 8.44% 120

HDB Financial Services Ltd. 130 AAA 8.69% 36

Kotak Mahindra Prime Ltd. 400 AAA 8.65% 24

PSU
PNB Housing Finance Ltd. 300 AAA 8.47% 60

ONGC Mangalore Petrochemicals Ltd. 2000 AAA 8.12% 36

NHPC 540 AAA 8.24% 180

Tax Free Bonds Amt (Cr) Rating Range Tenure

NHAI/ HUDCO/ NABARD/ REC/ PFC AAA 6.45% - 6.55% 10-15 Yrs.

Corporate bond: June 2016 saw corporate bond yields (AAA) to soften homogenously across all maturities. However, corporate bond yield curve had shifted downwards
with less intensity as against the softening observed in G-Sec yield curve. Similar to G-Sec yield curve, more softening is observed in short end segment as compared to long
end segment. On the other hand, corporate bond yields (AA+) witnessed softening of 10 bps thus resulting the gap between corporate bond yield and G-Sec yield to widen.

Commercial Paper Yield Curve CP/ CD Issuances - June-2016

CP Yield Curve - MoM & YTD Issuer Amt (Cr) Rating Coupon Tenure (days)
Certificate of Deposits
Andhra Bank 50 A1+ 6.80% 30
IDBI Bank 25 A1+ 6.80% 60
HDFC Bank 100 A1+ 6.81% 90
CP - PSU
Chennai Petroleum Corp.Ltd. 225 A1+ 6.92% 24
Power Finance Corp.Ltd. 550 A1+ 7.16% 75
SIDBI 200 A1+ 7.15% 90
CP - Private Sector
Family Credit Ltd. 400 A1+ 7.95% 27
Axis Finance Ltd. 200 A1+ 7.83% 60
Muthoot Finance Ltd. 300 A1+ 8.00% 90

CP/CD Analysis: The month of June'16 saw CP yield curve softened across all maturities, softening was more observed in the shorter end segment as against long end
segment. In consonance with G-Sec yield curve, CP yields curve has softened. Bank CD yields have declined too by 22 bps in June 2016. Liquidity conditions in June 2016
eased with average call money rates hovering around repo rates, which is desirable. As RBI continues to focus on liquidity and emphasising on the new method of lending
(MCLR), rates of money market instruments (CP/CD) should consolidate in narrow range with downward bias in near term may face some headwinds on account of
maturity of FCNR deposits.
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 July 2016 Edition
Monthly Update on Debt Market

Government Borrowings (INR Bn)

Central Government Actual Borrowings State Government Actual Borrowings

Government Borrowings: In June'16, Net State Govt. borrowings stood at INR 416.00 bn (i.e. 37.79% up on y-o-y basis). On other hand, Central
borrowings stood at INR 943.90 bn (8.58% up on y-o-y basis). GoI's intends to borrow ~60% of total borrowings in H1 FY16-17. Fiscal deficit in
May 2016 reached 42.89% of full year target. Further to this, outlay involved on account of Seventh Pay Commission may further aggravate the
fiscal deficit situtation but extra tax revenue on account of Krishi Kalyan Cess and benign commodity prices (crude oil) may cushion fiscal deficit
situtation.

Asset Class Wise Returns in Past 10 Years

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Inflation (CPI) 6.40% 9.02% 12.41% 10.43% 11.90% 10.19% 9.50% 6.27% 4.89% 5.39%
10 Yr G-Sec Yield 7.90% 7.58% 7.23% 7.92% 8.38% 8.17% 8.36% 7.81% 7.76% 7.44%
AAA Corporate -- -- 8.33% 8.78% 9.40% 9.17% 9.20% 8.82% 8.59% 8.18%

CNX Nifty 23.76% -36.26% 71.52% 10.27% -9.13% 7.33% 17.53% 26.33% -9.87% 5.75%
*Yields at 12 month ending average values | Inflation on PTP basis | Nifty on PTP basis

Daily LAF Borrowings ( INR Bn)

Liquidity conditions eased in June 2016 with banks operating on reserve repo throughout the month. Liquidity conditions were tight
during mid May16 led by stronger than usual demand for currency and build up cash balance of the government. In order to mitigate
the pressure RBI conducted OMOs worth INR 400 bn in June16. RBI outlined the new liquidity management policy and continues to
focus on liquidity with an objective of taking it to neutral stance from deficit. In June 2016, Liquidity conditions eased with average daily
LAF borrowing ~INR -61.7 bn as against ~INR 237.11 bn in May'16. The weighted average call money rate remained closely aligned with
the policy rate. Consequently, yields on money market instruments also eased in this quarter. The RBI will shortly review the
implementation of Marginal Cost of Lending Rate (MCLR) as it is important for the economy that transmission of policy rate happens.

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 July 2016 Edition
Monthly Update on Debt Market

M3 Money Supply
Money Supply In INR Trillion (Long Term & Short Term) | Individual Components As % of M3

M3 Analysis: Overall money supply in this fiscal has declined from to INR 119.99 tn (April 2016) to 119.15 tn (June 2016) reflecting a negative growth of ~0.70%. During the
same period the share of public deposits have fallen ; marking a negative growth of 18.04% in June 2016. On the other hand, share of currency with the public and term
deposits with banks have increased.

Fixed Deposit Schemes Rate of Interest % (Cumulative)

12 24 36 48 60 72 84 120
Company Date Rating
Months Months Months Months Months Months Months Months

Crisil FAAA
Bajaj Finance Ltd. 5-Nov-15 Tenure & ROI : 12-17 Months - 8.75% , 18-23 Months - 8.85%, 24-60 Months - 8.90%
ICRA MAAA

LIC HFL 26-Oct-15 Crisil FAAA 8.25% 8.35% 8.40% -- 8.50% -- -- --

PNB Housing Finance Ltd.

15-Apr-16 Crisil FAAA 8.00% 8.00% 8.25% 8.25% 8.25% 8.25% 8.25% 8.10%
(<=5 Crores)

Deewan Housing Finance Care AAA

30-Apr-16 8.75% 9.00% 8.75% 8.75% 8.75% 8.75% 8.75% 8.75%
Ltd (>=50 Lacs) BWR FAAA

HDFC Ltd. (Regular Crisil FAAA

27-Apr-16 8.25% 8.25% 8.25% 8.25% 8.25% -- -- --
Deposit) (<= 5 Cr.) ICRA MAAA

HDFC Ltd. (Regular Crisil FAAA

27-Apr-16 8.15% 8.15% 8.15% 8.15% 8.15% -- -- --
Deposit) ( > 5 Cr.) ICRA MAAA

HDFC Ltd. (Premium Crisil FAAA Tenure : 15/30 Months : ROI - 8.35% ,Tenure : 22/44 Months : ROI - 8.40% , (Annual Income Plan) Minimum Deposit
27-Apr-16
Deposit) (<= 2 Cr.) ICRA MAAA : 20,000

HUDCO (For Individuals &

1-Apr-16 Crisil FAA 7.70% 7.70% 7.70% 7.70% 7.55% 7.55% 7.55% --
HUF)

HUDCO (For Company,

1-Apr-16 Crisil FAA 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50%
Firm & Trust)

LIC HFL (Sr. Citizens) (< Crisil FAAA

26-Oct-15 8.50% 8.60% 8.65% -- 8.75% -- -- --
51,000) Stable

LIC HFL (Sr. Citizens) (> Crisil FAAA

26-Oct-15 8.35% 8.45% 8.50% -- 8.60% -- -- --
51,000 ) Stable

Guaranteed
KTDFC 3-May-16 8.50% 8.50% 8.50% 8.25% 8.25% -- -- --
Govt. of Ker
Shriram Transport Finance
Company Ltd. 1-May-16 CRISIL FAAA 8.50% 8.75% 8.75% 9.00% 9.00% -- -- --
(Senior Citizen)

Mahindra Finance 18-Oct-15 Crisil FAAA 8.45% 8.45% 8.45% 8.45% 8.45% -- -- --

Shriram Transport Finance

1-May-16 Crisil FAAA 8.25% 8.50% 8.50% 8.75% 8.75% -- -- --
Company Ltd.

Disclaimer : The above FD rates are tentative and are subject to change, The above mentioned rates are applicable for retail category.
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Contact Us: SPA Research | Sr. Manager - Rahul Chandalia| Email - spa.research@spagroupindia.com | Tel: 011-4567-5536

Disclaimer
Disclaimer: - The information contained in this report is obtained from reliable sources. In no circumstances should it be considered as an offer to sell/buy or, a
solicitation of any offer to, buy or sell the securities or commodities mentioned in this report. No representation is made that the transactions undertaken based on the
information contained in the report will be profitable, or that they will not result in losses. SPA and/or its representatives will not be liable for the recipients
investment decision based on this report.
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