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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.
 
 

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The CPI
The Consumer Price Index (Combined) inflation for November 2021 printed higher at 4.9% as compared to the reading of 4.5% in the previous month.
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Headline WPI inflation
Headline WPI inflation for November 2021 printed at 14.2%, significantly higher than 12.5% recorded in October 2021.
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IIP growth
IIP growth for October 2021 printed at 3.2%, marginally lower than the revised reading of 3.3% in September 2021, on a year on year basis.
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Real gross domestic product
Real gross domestic product for Q2FY22 noted a growth of 8.4% on a year on year basis, aided by strong favorable base and marginal pickup in activity across segments. Also, GDP expanded by 10.4% on a quarter on quarter basis and by 0.3% from Q2FY20 levels.
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Monetary Policy for FY22
In the Fifth Bi-monthly Monetary Policy for FY22, the MPC unanimously decided to maintain status quo on policy rates. The key policy rates stand unchanged: Repo rate at 4.00%, Reverse Repo rate at 3.35%, Marginal Standing Facility and Bank rate at 4.25%.
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