The Asian Development Bank cut its India growth prediction for the current fiscal year to 6.5% from 7% previously. "India's growth in Q2 slowed more than expected due to weak industrial output as tighter prudential norms by the central bank curtailed growth in unsecured personal loans, along with muted public capital spending and elevated food prices," the most recent Asian Development Outlook reported. The multilateral lending organization also reduced its FY26 prediction to 7% from 7.2% previously. The economy fell to a seven-quarter low of 5.4% in Q2FY25, down from 6.7% in the previous quarter.
Top 3 Leads Today
- Reducing debt burden priority for next decade, says FM Sitharaman.
- Need to regulate financial sector differently from other sectors, says CEA.
- Axis Bank expects no rate cuts till FY26-end on high inflation, strong growth.
Indian Markets
- Money Markets Minute: The call rate closed at the RBI's marginal standing facility rate of 6.75% on Wednesday, driven by strong demand for funds from banks as liquidity tightened due to the RBI delivering dollars against its outstanding forward contract sales. The one-day call money rate settled at 6.75%, marginally higher than Tuesday's 6.74%. The weighted average call rate stood at 6.70%, up slightly from 6.67% the previous day.
- Government Bond Brief: Yields rose on Wednesday as traders were disappointed by remarks from the newly appointed RBI Governor. Additionally, a rise in the US Treasury yields and caution ahead of the US CPI inflation data contributed to market volatility and subdued trade volumes. The 10-year benchmark 6.79%, 2034 bond closed at a yield of 6.72%, up from 6.71% on Tuesday. Market turnover dropped significantly to ₹344.55 billion, compared with ₹601.80 billion on the previous day.
- Corporate Bond Beat: Yields on corporate bonds remained stable in the secondary market on Wednesday as trading activity focused on the primary market. Secondary market deals totalled ₹70.10 billion, marginally lower than Tuesday’s ₹70.42 billion.
- Forex Flash: The rupee ended flat against the dollar on Wednesday as the RBI likely intervened by selling dollars to counter the downward pressure caused by dollar purchases from banks on behalf of importers, including oil companies. The currency traded within a tight range of six paise, briefly touching a record low of 84.8700 before settling at 84.8300 a dollar. This compares with Tuesday's close of 84.8525 a dollar.
- Stocks Spotlight: Caution dominated the domestic market on Wednesday as investors awaited the US inflation data, expected to provide insights into the Federal Reserve's upcoming interest rate decision. The benchmark indices traded in a narrow range for the fourth straight session and ended slightly higher. The Sensex inched up 0.02% to close at 81,526.14, while the Nifty gained 0.13%, closing at 24,641.80.
International Markets
- US Stocks: The S&P 500 index gained on Wednesday and tech stocks drove the Nasdaq above 20,000 points for the first time after the US inflation report raised Fed interest rate cut prospects. The Dow fell as US lawmakers unveiled a package to cut health insurer profits. The Dow dipped 0.22% to 44,148.56, the S&P 500 gained 0.82% to 6,084.19, and the Nasdaq climbed 1.77% to 20,034.89.
- Treasuries: Yields climbed after the US Treasury Department liquidated long-dated supply and data revealed a growing US budget deficit. The yield on benchmark US 10-year notes jumped 5.2 basis points to 4.273% from 4.221% Tuesday.
- Currency: The dollar touched a two-week high after in-line inflation kept Federal Reserve rate cuts chances alive later this month. Wednesday data showed the consumer price index jumped 0.3% last month, the highest gain since April after four months of 0.2% gains. The dollar index increased 0.31% to 106.68, while the euro fell 0.31% to $1.0493.
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 | 100 | 1257 | 335 | 81 | - |
| NBFC | 71 | 1077 | 102 | 392 | 1 |
| Private Sector Bank | 650 | 40 | 50 | 175 | - |
| Power - Transmission | - | - | 450 | - | - |
| Housing Finance Company | 120 | 200 | 12 | 1 | - |
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 | 635 | 7.41 | 7.41 |
| 7.74 LIC 22OCT27 | 2024-11-29 | 385 | 7.73 | 7.64 |
| 91.00 ICICI HOME FINANCE 25FEB28 | 2024-11-26 | 355 | 8.16 | 8.16 |
| 7.22 ULTRATECH 24NOV34 | 2024-11-26 | 300 | 7.22 | 7.22 |
| 7.92 INDIA INFRADEBT LIMITED 06JUN2030 | 2024-12-06 | 261 | 7.93 | 7.93 |
| 7.75 ICICI HOME FINANCE 24NOV34 | 2024-11-26 | 190 | 7.75 | 7.75 |
| 0% GOLDEN GUILD PROPERTIES PRIVATE LIMITED 27NOV2026 | 2024-11-28 | 150 | 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 | 123 | 10.69 | 10.60 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2029 | 2024-12-10 | 106 | 9.67 | 9.66 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2030 | 2024-12-10 | 102 | 9.68 | 9.66 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 24NOV2034 | 2024-12-10 | 84 | 9.67 | 9.10 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 29DEC2028 | 2024-12-10 | 82 | 9.67 | 9.66 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2027 | 2024-12-10 | 81 | 9.67 | 9.66 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 30DEC2033 | 2024-12-10 | 79 | 9.67 | 9.67 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2032 | 2024-12-10 | 78 | 9.68 | 9.67 |
| 9.25 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2031 | 2024-12-10 | 78 | 9.68 | 9.67 |
| 9.60 ARKA 24NOV34 | 2024-11-26 | 75 | 9.21 | 9.02 |
| 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 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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