The Reserve Bank of India raised its CPI inflation forecast for July-September to 4.4%, or by 60 bps from its previous forecast, surprising many economists. However, July’s inflation data, which fell to 3.54%, suggests inflation might align more closely with the earlier estimate of 3.8%. Economists noted that while this lower print is favourable, it likely won't significantly alter the medium-term inflation outlook or interest rate path.
Top 3 Leads Today
- Retail inflation drops to 3.5% in July, hitting a near 5-year low
- Industrial production slows down to a five-month low of 4.2% in June.
- OPEC cuts 2024, 2025 oil demand growth view on weak China consumption.
Indian Markets
- Money Markets Minute: The call rate ended significantly below the RBI's standing deposit facility rate of 6.25% as banks' demand eased towards the close. The weighted average call rate dropped to 6.47% from 6.53% on Friday, due to improved bank funding conditions following the maturity of four variable rate reverse repo tenders totalling ₹1.86 trillion on Friday.
- Government Bond Brief: Yields remained largely unchanged as traders refrained from making big bets ahead of India's July CPI inflation data. The 10-year benchmark 7.10% 2034 bond closed at a 6.88% yield, the same as Friday's close. Turnover dropped to ₹237.55 bln, down from ₹399.70 bln on Friday.
- Corporate Bond Beat: Corporate bond yields remained steady in the secondary market as traders avoided large bets ahead of the release of India's July CPI inflation data. Only ₹68.91 bln worth of deals were recorded on the exchanges.
- Forex Flash: Despite the RBI's ongoing efforts to support the rupee, it ended at a record closing low against the dollar due to continuous dollar buying by importers. The rupee fell to an all-time low of 83.9800 per dollar during the final trading session, narrowly avoiding the crucial 84 per dollar mark. After fluctuating within a small 4 paise range, the rupee settled at a record low of 83.9725 per dollar, down from 83.9550 per dollar on Friday.
- Stocks Spotlight: In a volatile market, Indian benchmark indices closed slightly lower, with Nifty falling below 24,350 after Hindenburg Research raised allegations against SEBI’s chairperson. Sensex ended down 0.07% at 79,648.92, and Nifty down 0.08% at 24,347, as last-hour selling wiped out earlier recovery gains.
International Markets
- US Stocks: Experienced mixed performance, driven by investor caution ahead of upcoming inflation data and lingering recession fears. On Wall Street, the S&P 500 ended the day flat, while the Nasdaq Composite Index edged up by 0.2%, and the Dow Jones Industrial Average declined by 0.4%. MSCI's global stock index also closed unchanged.
- Treasuries: Yields fluctuated but ended slightly lower as investors awaited key inflation reports. Early in the day, yields dropped due to concerns over the economic slowdown. However, they partially recovered after strong services sector data helped ease fears of an imminent recession. The yield on the 10-year Treasury note closed at 3.9035%.
- Currency: The Dollar Index held steady but slightly declined, closing near 103.13. The dollar's performance was subdued as investors remained cautious ahead of inflation data and potential Federal Reserve policy shifts. The yen strengthened sharply against the dollar, reflecting investor shifts in sentiment driven by global economic uncertainties.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 271 | 1115 | 1098 | 200 | 15 |
| Financial Institution | 10 | 101 | 530 | 3 | - |
| Private Sector Bank | - | 25 | 60 | 432 | - |
| Housing Finance Company | - | 250 | 63 | 203 | - |
| Petrochemicals | 230 | - | - | - | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.37 IRFC 31JUL29 | 2024-07-31 | 2700 | 7.38 | 7.36 |
| 9.10 CHOLAINVFIN 27JUN31 | 2024-07-31 | 1766 | 9.10 | 8.85 |
| 7.98 BAJAJ FINANCE 31JUL29 | 2024-07-31 | 762 | 7.97 | 7.95 |
| 7.80 BOM 05AUG34 | 2024-08-05 | 306 | 7.78 | 7.81 |
| 8.30 SMFG 30JUN27 | 2024-08-05 | 250 | 8.38 | 8.38 |
| 7.39 IIFCL 01AUG39 | 2024-08-01 | 240 | 7.38 | 7.39 |
| 8.50 GODREJHSGFIN 30NOV27 | 2024-07-30 | 240 | 8.55 | 8.57 |
| 7.98 IIDL 05AUG34 | 2024-08-05 | 205 | 7.97 | 7.97 |
| 9.90 TYGER CAPITAL PVT LTD - CALL 29JUL2027 MAT | 2024-07-29 | 100 | 10.35 | 10.35 |
| 7.99 RCFL 07AUG27 | 2024-08-07 | 100 | 7.99 | 7.99 |
| 8.28 PNB HFL 30DEC26 | 2024-08-07 | 100 | 8.31 | 8.31 |
| 8.1841 TFSIN 29SEP27 | 2024-08-01 | 90 | 8.20 | 8.20 |
| 0% EQUINOX INDIA DEVELOPMENTS LIMITED 05SEP2025 | 2024-08-05 | 80 | 11.93 | 11.93 |
| 7.87 SUMMITDIGITELLTD 15DEC29 C 15MAR30 M | 2024-08-05 | 75 | 8.15 | 8.15 |
| 10.30 IKFFIN 30JUL27 | 2024-08-01 | 55 | 11.16 | 10.52 |
| 11.40 KEERTANA 28JAN27 | 2024-07-30 | 53 | 12.96 | 13.90 |
Source: Harmoney data analytics
Events This Week
August 13, Tuesday:
- US PPI for July.
August 14, Wednesday:
- India WPI for July
- US Real earnings for July.
- US CPI for July.
- India Passenger vehicles sales for July.
August 15, Thursday:
- US Advance monthly sales for retail & food services for July.
- US Unemployment insurance weekly claims Aug 10 week.
- US Import & Export price indexes for July.
- US Weekly export sales.
- US Industrial production and capacity utilization for July.
- India Independence Day.
- India Balance of trade for July.
- India Exports and imports for July.
August 16, Friday:
- India FX reserves for Aug 9 week.
- US New residential construction for July.
- US State employment and unemployment for July.
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