Market roundup: March debt inflows highest in five years
In other news, heat drives volumes on spot electricity market; infra IPOs not in favour in fiscal year 2017
Indian debt markets received Rs27,260 crore of inflows in March, the highest monthly inflow in at least five years and almost entirely concentrated in the second half of the month, said a report by Nomura. Similar to what was observed in February, inflows were driven by flows into central government debt. Central government debt experienced net outflows worth Rs210 crore until 10 March, after which inflows picked up, with central government bonds receiving Rs17,800 crore of inflows from 14-31 March. During the month, foreign investors increased their holdings of Indian government bonds by Rs17,580 crore, which is the largest monthly increase in 30 months.
According to Nomura, a couple of events during the month could have led to this strong pickup in inflows, like the results of the state election, in which the Bharatiya Janata Party performed well, and a dovish hike by the US Federal Reserve. Overall, Q1 2017 was good for flows into India debt markets and going ahead, this trend of inflows into India is likely to continue, it added.
Heat drives volumes on spot electricity market
Rising temperatures and early arrival of summer season in several parts of the country is driving up demand for electricity. The spot electricity market volume on the Indian Energy Exchange rose 15% in March over February. In comparison, volume increased by 9% in the year-ago month on a sequential basis. While rising demand should bode well for the merchant power producers and companies with surplus electricity, prices continue to remain subdued due to excess supplies. The average market clearing price during March stood at Rs2.56 per unit, almost on par with Rs2.54 per unit in February.
Infra IPOs not in favour in fiscal year 2017
Despite a gradual pickup in project execution in fiscal year 2017 (FY17), the infrastructure sector raised very little funds from the capital markets. A report by Equirus Securities Pvt. Ltd lists barely two initial public offerings (IPOs) that hit the market in FY17, raising Rs1,562 crore compared to nearly double the amount raised a year ago through eight IPOs. That said, mergers, acquisitions and private equity deals were the flavour of the year with power, renewables and roads leading the infrastructure pack. About 33 transactions were concluded in FY17. With the exit policy allowing developers to sell stake in assets fully, many chose to monetize the same and shore up distressed balance sheets.