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Interest Rate Derivatives

An interest rate derivative is an instrument where the underlying asset is the right to pay or receive an (usually notional) amount of money at a given interest rate. In other words, interest rate derivatives are financial instruments based on an underlying financial security whose value is affected by interes rate changes. These products are used by a variety of participants in order to hedge their exposures against adverse interest rate movements. Such instruments are also used for speculation purposes, which broadly serve as an indicator for interest rate expectations. In India, the interest rate derivatives segment is at a growing stage. As of now, the interest rate derivatives permitted by regulatory guidelines in India include


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Surprising on the downside, CPI print for Feb-18 stood at 4.44% as against 5.07% in the previous month. Deflationary pressures emanating from the food basket as well as a favorable statistical base led to this fall.
IIP, the country’s barometer for production activity, maintained strong recovery momentum, growing at 7.5% in Jan-18 after posting 7.1% in Dec-17.
WPI inflation
WPI inflation for the month of February came in at 2.48% vis-à-vis 2.84% in January despite a lack of sequential momentum due to a favorable statistical base. Deflationary momentum in primary articles was offset by a rise in fuel and manufacturing prices.
Indias trade
India’s trade deficit narrowed to USD 11.98 Bn in February compared to USD 16.29 Bn in January. Imports fell -7.1% to USD 37.81 Bn while exports jumped 6.0% to USD 25.83 Bn in February.