After weeks of anticipation, the government named Sanjay Malhotra, secretary in the Ministry of Finance, the 26th governor of the Reserve Bank of India, on Monday for a three-year tenure starting December 11. Malhotra, 56, succeeds Shaktikanta Das, who helmed the RBI for six years, the second longest in RBI history. Malhotra takes over the central bank at a time when domestic economic growth slumped to a seven-quarter low of 5.4%, and many quarters are calling for interest rate cuts to boost growth. The RBI cut its 2024-25 GDP growth prediction from 7.2% to 6.6%, with Q3 growth at 6.8% and Q4 at 7.2%, at its recent monetary policy meeting.
Top 3 Leads Today
- Fuelling growth, taming inflation to top Sanjay Malhotra's agenda at RBI.
- CPI-AL inflation falls to 5.96% in October from 6.36% September.
- Fin min says found suspected input tax credit evasion of ₹351 billion Apr-Oct.
Indian Markets
- Money Markets Minute: The call rate fell below the RBI's standing deposit facility rate of 6.25% on Monday as banks' demand for funds eased in the latter part of the trade. The one-day call money rate closed at 5.75%, compared with 6.00% previously. The weighted average call rate settled at 6.65%, down from 6.15% previously.
- Government Bond Brief: Yields dropped significantly on Monday as traders took advantage of attractive prices following Friday's steep decline while preparing for potential interest rate cuts in the coming months. The 10-year benchmark 6.79%, 2034 bond yield fell to 6.72%, from 6.74% at the previous close. Market turnover was notably lower at ₹461.85 billion, compared with ₹863.05 billion previously.
- Corporate Bond Beat: After a 3-4 basis point rise on Friday, corporate bond yields remained stable in the secondary market on Monday, with market activity largely shifting to the primary segment. Secondary market transactions totalled ₹77.52 billion, nearly unchanged from ₹77.15 billion recorded on Friday. This reflects steady demand amidst limited trading dynamics.
- Forex Flash: The rupee edged lower against the dollar on Monday as banks purchased dollars, likely for importers, which added pressure on the domestic currency. It traded in a narrow range of just 5 paise during the session, eventually settling at 84.7300 per dollar, marginally above its record closing low of 84.7400 hit on Dec 4. This was a slight decline from Friday's close of 84.6875 per dollar.
- Stocks Spotlight: Indices moved within a narrow range on Monday and ended lower for the second consecutive session, with the Nifty closing near 24,600. Selling pressure was evident in FMCG, PSU Bank, auto, and pharma sectors, while buying interest was observed in capital goods, IT, and metal stocks. At the close, the Sensex fell 0.25% to 81,508.46, and the Nifty dropped 0.24% to 24,619, reflecting cautious sentiment among investors.
International Markets
- US Stocks: Wall Street's main indexes closed down on Monday, led by a slide in AI leader Nvidia, which dragged on tech companies, as investors anticipated a critical inflation data later this week. Nvidia sank 2.5% as China's market regulator opened an inquiry into the chipmaker for allegedly violating antimonopoly laws. The Dow sank 0.54% to 44,401.93, the S&P 500 dropped 0.61% to 6,052.85, and the Nasdaq declined 0.62% to 19,736.69.
- Treasuries: Yields rose as investors waited to see if persistently high price pressures could derail expectations for a rate drop by the Federal Reserve the following week. The next test will be the US inflation report on Wednesday. Traders expect a 25-basis point cut at the Federal Reserve policy meet next week. The yield on benchmark US 10-year notes increased 5 basis points to 4.203% from 4.153% Friday.
- Currency: The dollar rose modestly in volatile trade on Monday as investors awaited U.S. inflation data later this week, but the Australian and New Zealand dollars surged after China promised a "appropriately loose" monetary policy next year. The dollar index was up 0.179% to 106.14. The euro was down versus the dollar at $1.0554, having lost as much as 0.3% earlier, while the dollar rose 0.77% against the yen to 151.235. After China changed its monetary policy to boost growth, the Australian dollar rose 0.82% and the kiwi 0.58%.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 285.9 | 848.38 | 213.85 | 541.12 | 1.6 |
| Financial Institution | 320 | 527.15 | 265 | 31.75 | |
| Housing Finance Company | 785 | 58.75 | 6.26 | 125.48 | 2.25 |
| Private Sector Bank | 100 | 300.32 | 4.86 | ||
| Telecom | 85 | 100 | 6.3 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.37 IREDA 27NOV31 | 2024-11-27 | 910 | 7.37 | 7.37 |
| 7.41 BOB 28NOV34 C 28NOV39 M | 2024-11-28 | 745 | 7.40 | 7.41 |
| 7.41 BOI 29NOV34 | 2024-11-29 | 395 | 7.41 | 7.43 |
| 91.00 ICICI HOME FINANCE 25FEB28 | 2024-11-26 | 355 | 8.16 | 8.16 |
| 7.74 LIC 22OCT27 | 2024-11-29 | 325 | 7.75 | 7.75 |
| 7.22 ULTRATECH 24NOV34 | 2024-11-26 | 300 | 7.22 | 7.22 |
| 7.75 ICICI HOME FINANCE 24NOV34 | 2024-11-26 | 190 | 7.75 | 7.75 |
| 0% GOLDEN GUILD PROPERTIES PRIVATE LIMITED 27NOV2026 | 2024-11-28 | 140 | 20.06 | 20.00 |
| 7.78 SUNDARAM HOME FINANCE 02FEB28 | 2024-12-02 | 140 | 7.79 | 7.79 |
| 9.80 IIFL FINANCE - C 03DEC26 M | 2024-12-03 | 79 | 10.70 | 10.75 |
| 9.60 ARKA 24NOV34 | 2024-11-26 | 75 | 9.21 | 9.02 |
| 9.50 HERO FINCORP PERP 25MAY35 C | 2024-11-25 | 75 | 9.36 | 0.00 |
| 8.15 PNB HOUSING 29NOV27 | 2024-11-29 | 70 | 8.15 | 8.15 |
| 7.93 NIIF 05DEC30 | 2024-12-02 | 67 | 7.92 | 7.93 |
Source: Harmoney data analytics
Events This Week
December 10, Tuesday:
- US Quarterly Financial Report.
December 11, Wednesday:
- US CPI for November.
- US Real Earnings for November.
- India M3 Money Supply Nov 25 week.
December 12, Thursday:
- US Unemployment Insurance Weekly Claims Report Dec 7 week.
- US Weekly Export Sales.
- US PPI for November.
- US Quarterly Services.
- India Consumer Price Index for November.
- India Cumulative Industrial Output for October.
- India Industrial Output for October.
- India Manufacturing Output for October.
December 13, Friday:
- US Import & Export Price Indexes for November.
- India Bank Loan Growth for Nov 25 week.
- India FX Reserves Dec 2 week.
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