On Monday, the all-powerful GST Council established a state panel to examine the future of the compensation cess, proposed the treatment of cess collections post-loan repayment, expanded the rate rationalisation state panel to address life and health insurance issues, and provided relief to foreign airlines. FM Sitharaman clarified that the compensation cess was legally extended only until March 2026. It was meant to be used for compensation and to pay back loans that were taken out right after each other. If the cess is paid off early, collection will stop for the first five years, which is what it was meant to do.
Top 3 Leads Today
- Market expects MPC to implement cumulative 50 bps rate cut by March 2025.
- CRISIL sees FY25 revenue of organised gold jewellers rising 22-25%.
- Mpox case confirmed, strain not part of WHO's health emergency: Govt.
Indian Markets
- Money Markets Minute: The rate for one-day loans settled at 6.40%, below the RBI's 6.50% repo rate, due to low demand for funds amid comfortable liquidity. The weighted average call rate was 6.52%, up from 6.48% on Friday.
- Government Bond Brief: Yields remained steady as the US non-farm payrolls data for August offered little clarity on future US rate cuts. Traders are also awaiting cues on India's rate cut outlook, including potential changes in the Monetary Policy Committee's stance. The 10-year benchmark 7.10%, 2034 bond closed with a yield of 6.85%, unchanged from Friday, with a turnover of ₹239.25 billion, down from ₹443.20 billion on Friday.
- Corporate Bond Beat: Corporate bond yields remained steady in the secondary market as most participants focused on basic portfolio needs. Transactions totalled ₹88.50 billion, slightly up from ₹88.03 billion on Friday.
- Forex Flash: The rupee ended steady against the dollar as RBI's dollar sales offset the impact of a rising dollar index and oil companies' dollar purchases. It moved within a 4-paise range, closing at 83.9550 per dollar, compared with 83.9475 on Friday.
- Stocks Spotlight: Markets rebounded from a three-day slump, led by consumer staples and banking shares, and supported by gains in European markets. Global recovery followed a selloff due to weak US jobs data, leaving uncertainty around Fed rate cuts. The Nifty 50 rose 0.34% to 24,936.40, and the Sensex gained 0.46% to 81,559.54.
International Markets
- US Stocks: All three major US indexes rose more than 1%, with the S&P 500 and Dow halting a four-day losing run and recovering from their worst weekly percentage losses since March 2022 as investors awaited inflation reports and the Federal Reserve's policy decision next week. Investors fled equities last week after weaker-than-expected US Data. The Dow Jones gained 1.20%, to 40,829.59, while the S&P 500 rose by 1.16%, to 5,471.05, and the Nasdaq jumped 1.16%, to 16,884.60.
- Treasuries: Yields in the US slipped in bumpy trading on Monday as the extent of the Fed's expected to rate drop this month remained unknown. Investors will closely watch CPI report due Wednesday after Tuesday night's first debate between Democratic Kamala Harris and Republican Donald Trump ahead of the Nov 5 election for more cues. The yield on benchmark 10-year notes fell to 3.7061% from 3.71% on Friday. The 30-year bond dropped to 4.0066% from 4.02% on Friday.
- Currency: The dollar rose against a major basket of currencies as investors anticipated critical inflation data and reduced expectations for next week's policy rate cut. The dollar index gained 0.41%, while the euro fell 0.42% to $1.1037. The Japanese yen fell 0.48% against the dollar to 143.01 per dollar, while sterling was last trading at $1.3072, down 0.39% on the day.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| Financial Institution | 10 | 525 | 2270 | 75 | - |
| NBFC | 161 | 1236 | 71 | 216 | 25 |
| Housing Finance Company | 3 | 465 | 765 | 81 | 17 |
| Private Sector Bank | 2 | 18 | 5 | 525 | - |
| Other Utilities | - | 1 | - | - | 541 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 8.27 CANARA BANK PERP 29AUG29 C | 2024-08-29 | 1704 | 8.27 | 8.24 |
| 7.22 HPCL 28AUG29 | 2024-08-28 | 1074 | 7.22 | 7.22 |
| 7.37 IIFCL 02SEP34 | 2024-09-02 | 525 | 7.36 | 7.38 |
| 7.61 LICHSGFIN 29AUG34 | 2024-08-29 | 500 | 7.61 | 7.60 |
| 7.30 BOB 27AUG34 | 2024-08-27 | 450 | 7.30 | 7.30 |
| 8.55 CENTURYTEX 30AUG29 | 2024-08-30 | 350 | 8.57 | 8.58 |
| 7.72 THDC 02SEP34 | 2024-09-03 | 345 | 7.72 | 7.72 |
| 7.74 LICHSGFIN 11FEB28 | 2024-08-29 | 285 | 7.76 | 7.76 |
| 7.42 SBI 29AUG34 C 29AUG39 M | 2024-08-29 | 270 | 7.41 | 7.42 |
| 8.35 CENTURYTEX 30AUG27 | 2024-08-30 | 250 | 8.35 | 8.35 |
| 7.45 AXISBANK 05SEP34 | 2024-09-05 | 250 | 7.45 | 7.45 |
| 8.70 ADANI ENERGY SOLUTIONS LTD 28AUG2034 | 2024-08-27 | 240 | 8.50 | 8.50 |
| 9.50 AFL 23AUG34 | 2024-08-27 | 160 | 9.32 | 9.49 |
| 8.35 JSW STEEL LIMITED - C 29AUG2029 M | 2024-08-29 | 150 | 8.34 | 8.34 |
| 8.43 JSW STEEL LIMITED - C 29AUG2031 M | 2024-08-29 | 150 | 8.43 | 8.43 |
| 7.25 IRFC 29AUG34 | 2024-08-29 | 90 | 7.25 | 7.24 |
| 9.25 MOFSL 03SEP32 | 2024-09-03 | 77 | 9.22 | 9.24 |
| 8.0490 ADITYA BIRLA HFL 03DEC27 | 2024-09-05 | 70 | 8.04 | 8.07 |
| 9.03 CREDILA 04MAR26 | 2024-09-04 | 60 | 9.12 | 9.10 |
| 10.75 MIDLANDMICROFIN 27AUG26 | 2024-08-27 | 57 | 12.02 | 12.75 |
| 8.40 GODREJHSGFIN 05JAN28 | 2024-09-05 | 50 | 8.42 | 8.42 |
Source: Harmoney data analytics
Events This Week
September 10, Tuesday:
- US Quarterly Financial Report - Industry for Q2.
September 11, Wednesday:
- US Real Earnings for August.
- US CPI for August.
September 12, Thursday:
- US Unemployment Insurance Weekly Claims Report for Sep 7 week.
- US PPI for August.
- US Weekly Export Sales.
- India Industrial Production for July.
- India Inflation Rate for August.
- India Manufacturing Production for July.
- India Passenger Vehicles Sales for August.
September 13, Friday:
- US Import & Export Price Indexes for August.
- India Foreign Exchange Reserves for Sep 6 week.
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