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STATE DEVELOPEMENT LOANS

 
State Development Loans, or SDLs, as they are colloquially called, are issuances of the respective states in order to manage their own state finances. The structure and nature of SDLs is broadly similar to that of a fixed rate Dated G-Sec. However, these instruments are generally issued for maturities upto 10 years. Also, reissuances of SDLs are extremely rare. In other words, generally, every SDL auction is an auction of a new SDL security and therefore, the auction process is yield based.

Generally, as SDLs have the backing of the respective states, depending on the fiscal health of the states and the consequent risk element associated in such investments, SDLs are traded at a spread above the benchmark G-Sec security. Liquidity of these securities is yet another factor that has a bearing on SDL valuation. However, investment in SDLs may be a good option for investors seeking to earn higher coupons.

As in Dated G-Sec, institutional player dominate this segment. Foreign flows too, have been permitted in SDLs. Non-competitive bidding is allowed in SDLs to the extent of 1% of the notified amount. The trading and settlement mechanism for SDLs remains the same as in case of Dated G-Sec.

STCI PD has been one of the most active players in the debt market. Apart from participating in SDL auctions on proprietary basis, we also accept Competitive and Non-Competitive bids from clients, thereby benefitting them with wider access to debt market. We also, consistently provide two way quotes in all debt securities.

Clients interested in placing bids in Primary auctions and/or buying/selling SDL securities may contact our Sales Personnel on 022-66202224/25/28. We endeavor to provide the best possible returns to our clients, keeping in line with their overall investment objectives.
 
 

Latest News

In its Fifth Bi-Monthly
In its Fifth Bi-Monthly Monetary Policy for FY19, the MPC-panel maintained ‘status quo’. Consequently, key policy rates remained unchanged - Repo rate at 6.50%, Reverse repo at 6.25% and MSF at 6.75%.
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Inflation projections for
Inflation projections for 2018-19 were revised downwards as food inflation has remained benign. It is projected at 2.7%-3.2%% in H2 FY19 (3.8%-4.5% previously) and 3.8%-4.2% in H1 FY20.
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Growth for FY19
Growth for FY19 is projected at 7.4% with 7.2%-7.3% in H2 FY19 (7.3%-7.4% previously). Growth in H1 FY20 is projected to stand at 7.5%.
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RBI in its February policy
RBI in its February policy cut the repo rate by 25 bps while also changing the stance to ‘neutral’ from ‘calibrated tightening’. Consequently, key policy rates are pegged as follows - Repo rate at 6.25%, Reverse Repo at 6.00% and Marginal Standing Facility (MSF) at 6.50%
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The inflation projections
The inflation projections have been revised downwards to 2.8% in Q4 FY19 (from 2.7-3.2% earlier), 3.2-3.4% in H1 FY20 (from 3.8-4.2% earlier) and 3.9% in Q3 FY20
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GDP growth for FY20
GDP growth for FY20 has been projected at 7.4% - in the range of 7.2-7.4% in H1 (from 7.5% earlier) and 7.5% in Q3.
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Spurring a positive surprise
Spurring a positive surprise, Jan CPI stood significantly lower than market expectations at 2.05% vis-à-vis the revised Dec-18 estimate of 2.11% (2.19% previously). Lack of inflationary pressures in the services components led core CPI to also moderate, clocking in at 5.38%, a sharp fall from 5.68% in Dec-18.
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Industrial production rose
Industrial production rose by 2.4% in Jan-19 as compared to 0.3% in Feb-18. Cumulatively, IIP for FY19 stood at 4.6%, lower than 3.7% in FY18. Significant sequential uptick was observed across sectors; Mining (3.4%), Electricity (2.1%) and Manufacturing (6.8%)
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Wholesale inflation for Jan-19
Wholesale inflation for Jan-19 came in at 2.76%, lower than 3.80% registered in Dec-18. Broad-based fall in commodity prices amid deflationary pressures from food and fuel items led to this downtick in inflation. Consequently, core WPI inched down to 2.91%, as compared to 4.22% in Dec-18.
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