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Commentary

Readings: China Raises Rates, Coal India, Bond Yields

China takes rates up 25 basis points. Inflation, it seems. Lending rates are now 5.56%.

Coal India’s 15,000 crore IPO is 1.7 times oversubscribed.

Coal India IPO statistics

For the record: I looked at the IPO document, realized I don’t understand a darn thing about coal, and know just two things:

  • The P/E is 15 or so. This is a commodity. Big and all, but they won’t get a single paisa from this IPO (it all goes to the govt).
  • The issue is already oversubscribed, but retail will perhaps get full only by 21st (when the issue ends)

I’m not subscribing – there are better opportunities out there. (Biocon – yes, even now. Sugar looks like a better cyclical, Auto-ancilliaries, etc. )

India’s 10-year bond yields are at 8.07% while 91-day T-bills are at 6.6%. This is one narrow band.

  • PX says:

    >Coal India is a 5% play for the small investor
    in any case the way it is being marketed , as people account for the potential growth possible if the co goes in for increasing efficiency, washing coal etc seems to be a desperate bid when it is a PSU, and this is a money making venture for the GOI as u correctly pointed out.
    china has upped rates!
    One question though on SBI Bonds , wd be happy if u answer.Is it a good idea to park money for the short to medium term and what about liquidity and tradability and can an investor get a loss free exit?

  • Anonymous says:

    >Since Bond Yields are rising everyday, I wonder if SBI bond when starts trading will trade above face value.

    However if it catches on with investor, some people say other banks will also come with such products with yields as high as 12%. We will have to wait and see. But if this opens bond market trading for investors in NSE platform it will be very good.

    There seems to be two opposite currents: China and India facing inflation/asset bubble threat and US bent on QE2. Which one will win is not clear. But my bet is on QE.

    MK

  • Anonymous says:

    >Seems like Coal India IPO has forced Banks to borrow from RBI window and possibly increasing the 10 year bond yield.

    MK