Shopping For NCDs on the Stock Market

Buying an NCD at an IPO when interest rates are high and holding it to maturity is a pretty sound idea.But buying NCDs in the secondary market can be pretty profitable too.

The prices of NCDs vary with changes in the prevailing interest rates.So careful shopping when prices fall as interest rates rise and holding on till maturity is more profitable.

If a person is good at figuring out which way the interest rates will move,he could buy NCDs cheap and exit them when their prices peak.This could potentially increase returns.

Sadly NCDs are not tracked as much as stocks,so we need to do a bit of hunting before we can home in on bargains.The first chore is to look for lists of NCDs available on the stock exchanges.Here are the links to do this:

http://www.nseindia.com/content/debt/wdmlist.csv

http://www.bseindia.com/debt/tradereport.aspx?L=010100

Then we need to check to see what price the NCDs might be trading at.For this I use the security search feature on my broker’s site.

Then I use the bond yield calculator here to find out how much I can hope to make by purchasing an NCD at a given rate:

http://www.moneychimp.com/calculator/bond_yield_calculator.htm

Hope this helps.Happy NCD shopping!