Retail inflation surged to a 14-month high of 6.2% in October, fuelled by a spike in food prices, above the upper limit of the Reserve Bank of India’s target range. This steep increase appears to have extinguished any remaining prospects for a policy rate cut when the RBI's Monetary Policy Committee meets from December 4-6. The National Statistical Office reported that year-on-year Consumer Price Index-based food inflation rose to 10.87% in October, the highest in 15 months, driven by rising prices for vegetables (42.18%), fruit (8.43%), oils and fats (9.51%), and cereals (6.94%).
Top 3 Leads Today
- September IIP growth rebounds to 3.1% from August’s 22-month low of -0.1%.
- OPEC further cuts crude oil demand growth forecasts for 2024 by 107,000 bpd.
- PSBs register strong business growth of 11% in H1 FY25, says FinMin.
Indian Markets
- Money Markets Minute: The call rate closed significantly below the RBI's standing deposit facility rate of 6.25% due to low demand for funds amid high surplus liquidity. The one-day call money rate ended at 5.75%, up from 5.50% on Monday, while the weighted average rate remained steady at 6.45%.
- Government Bond Brief: Yields edged higher as traders covered short positions ahead of India's October CPI data release, with the bond market largely anticipating inflation reaching a 14-month high. The yield on the 10-year benchmark 7.10%, 2034 bond closed at 6.83%, up from 6.82% on Monday. Market turnover rose to ₹415.65 billion from ₹227.85 billion in the previous session.
- Corporate Bond Beat: Corporate bond yields in the secondary market remained steady as October's CPI inflation data provided little new direction. Total transaction volumes rose, with deals amounting to ₹104.30 billion recorded on the exchange, up from ₹62.22 billion on Monday.
- Forex Flash: The rupee ended flat against the greenback as dollar sales by public sector banks, likely on behalf of the RBI, balanced out demand from importers and foreign portfolio investors. After hitting an intraday record low of 84.4100 per dollar, the rupee closed at 84.3925, unchanged from the previous close, trading within a narrow range of 3 paise throughout the day.
- Stocks Spotlight: Indices closed significantly down, led by sharp fall in heavyweight stocks HDFC Bank and State Bank of India. Mid- and small-cap indices also saw considerable losses. After remaining mostly flat in the first half of the session, the key indices dropped as banking stocks weakened. The Nifty 50 ended at 23,883.45 points, down 1.1%, while the Sensex closed at 78,675.18 points, down 1%.
International Markets
- US Stocks: Wall Street's three major indexes fell on Tuesday as investors booked profits from a post-election run and awaited the US inflation data this week. Investor euphoria waned on Tuesday on concerns that the incoming the US administration might worsen inflation. The Dow Jones Industrial Average declined 0.86% to 43,910.98, S&P 500 fell 0.29% to 5,983.99, and Nasdaq Composite slipped 0.09% to 19,281.40.
- Treasuries: Yields rose on fears that Trump's plans might reignite inflation after a lengthy battle to curb pricing pressures following the COVID-19 outbreak. Traders expect that tariffs, tax cuts, and immigration limits are all putting pressure on inflation, leaving the Federal Reserve less scope to cut interest rates. The benchmark US 10-year note yield rose 12.2 basis points to 4.43%, below last week's 4-month high of 4.479%.
- Currency: On Tuesday, the dollar soared to a 6-1/2-month high against the major basket of currencies amid expectations of inflationary import duties from Republican President-elect Trump. The US dollar index, which measures the currency against six peers, increased 0.51% to 105.96 after reaching 106.17, its highest level since early May. The euro fell to $1.0596 on Tuesday, its lowest level since November 2023, and was last down 0.32% at $1.06215.
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 | 423 | 1230 | 660 | 50 | - |
| NBFC | 219 | 694 | 272 | 703 | 80 |
| Housing Finance Company | 210 | 456 | 75 | 16 | - |
| Private Sector Bank | 566 | 180 | - | - | - |
| Public Sector Bank | - | - | - | 150 | 6 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.32 IREDA 04NOV29 | 2024-11-04 | 336 | 7.32 | 7.31 |
| 7.47 IIFCL 07NOV27 | 2024-11-07 | 215 | 7.47 | 7.47 |
| 7.26 IIFCL 07NOV34 | 2024-11-07 | 175 | 7.26 | 7.27 |
| 7.7980 L&T FINANCE 28DEC29 | 2024-10-28 | 130 | 7.80 | 7.80 |
| 8.03 POONAWALLA FINCROP 07NOV29 | 2024-11-07 | 103 | 8.02 | 8.03 |
| 7.65 SUNDARAM HOME FINANCE 29OCT29 | 2024-10-29 | 100 | 7.64 | 7.64 |
| 8.90 BHARATI TELECOM 05NOV31 | 2024-11-05 | 60 | 8.69 | 8.60 |
Source: Harmoney data analytics
Events This Week
November 13, Wednesday:
- US CPI for October.
- US Real earnings for October.
- India M3 Money supply for Nov 1 week.
- India Passenger vehicles sales for October.
November 14, Thursday:
- US Unemployment insurance weekly claims report for Nov 9 week.
- US PPI for October.
- India WPI for October.
November 15, Friday:
- US Weekly export sales.
- US Advance monthly sales for retail & food services for October.
- US Import & export price indexes for October.
- India Bank loan growth for Nov 1 week.
- India Deposit growth for Nov 1 week.
- India Foreign exchange reserves Nov 8 week.
- India Balance of Trade for October.
- India Exports and Imports for October.
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