In June, India's Wholesale Price Index (WPI)-based inflation increased for the fourth consecutive month to a 16-month high of 3.36 percent, up from 2.61 percent in May, owing mostly to an adverse base impact and a strong jump in food prices. On Monday, the Ministry of Commerce and Industry reported 10.87% food price inflation for the month. In June 2023, wholesale inflation was (-)4.18%.
Top 3 Leads Today
- WPI inflation surges to 16-month high of 3.36% in June on costlier vegetables
- India's trade deficit narrows in June; exports fall to 7-month low.
- India's outward FDI rises to $2.14 billion in June, shows RBI data.
Indian Markets
- Money Markets Minute: The call money market rate closed below the RBI's standing deposit facility rate of 6.25% due to liquidity surplus within the banking system. The one-day call money rate ended at 5.75% on Monday, down from 6.55% on Friday for a three-day loan. Meanwhile, the weighted average call rate was 6.47%, slightly up from 6.46% the previous Friday.
- Government Bond Brief: Government bond yields ended marginally lower on Monday after an initial rise in early trade. Yields initially rose following the announcement of higher-than-expected June CPI inflation data on Friday. However, purchases from banks with shorter maturities reduced rates slightly. The 10-year benchmark bond, 7.10% maturing in 2034, closed at 6.98% on Monday, compared to 6.99% Friday. Total turnover reached ₹438.05 billion, slightly lower than Friday's ₹457.20 billion.
- Corporate Bond Beat: Yields on corporate bonds maturing in three years fell slightly, following the trend in the government bond market. Overall trade volume was impacted tepid participation, with combined deals on the NSE and BSE amounting to only ₹49.77 billion on Monday, down from ₹75.32 billion on Friday.
- Forex Flash: The rupee closed near a one-month low against the dollar as banks continued to buy the greenback for importers. After fluctuating within a range of 9 paise, the rupee settled at 83.5925 per dollar, compared to 83.5350 per dollar on Friday.
- Stocks Spotlight: The Nifty 50 reached new heights, surpassing the 24,600 point mark for the first time and closing at its highest level ever. The benchmark indices advanced despite anticipated weak earnings growth for Indian corporations in the June quarter. The Nifty 50 ended 0.4% higher at 24,586.70 points, while the BSE Sensex rose 0.2% to close at 80,664.86 points, also marking its highest closing level to date.
International Markets
- US Stocks: Stock indexes gained on Monday as investors considered the possibility of Republican Donald Trump winning the US presidential election after surviving an assassination attempt. Dow Jones closed at an all-time high and was up 0.53% to 40,211.72, S&P 500 gained 0.28% to 5,631.22, and Nasdaq Composite gained 0.40% to 18,472.57.
- Treasuries: Treasury yields climbed on Monday as investors considered the likelihood of Trump winning the US presidential election and traders increased their bets of possible three Fed rate cuts by December. The rate cuts expectation was fuelled after US Fed Chair Powell's comments on Monday. Powell said that the three US inflation readings from the second quarter of this year "add somewhat to confidence" that the rate of price increases is returning to the Fed's goal in a way that is sustainable.
- Currency: The US dollar weakened following remarks from Federal Reserve Chair Jerome Powell. The dollar dropped to 157.15 while Powell spoke, which was its lowest level since June 17; however, it later rose again. The dollar index fell 0.04% to 104.25 and the euro fell 0.01% to $1.0893. Against the Japanese yen, the dollar rose 0.02% to 158.04.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 55 | 647 | 539 | 157 | 36 |
| Financial Institution | - | 869 | 126 | 90 | 10 |
| Private Sector Bank | 316 | 55 | - | 113 | - |
| Public Sector Bank | - | 0 | - | 20 | 350 |
| Housing Finance Company | - | 201 | 162 | 106 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.43 NBFID 04JUL34 | 2024-07-04 | 2310.00 | 7.42 | 7.39 |
| 7.89 BOM 04JUL29 C 04JUL34 M | 2024-07-04 | 547.00 | 7.91 | 7.93 |
| 7.92 TATA CAPITAL HFL 07JUL34 | 2024-07-08 | 420.00 | 7.92 | 7.91 |
| 7.53 ICICI 03JUL34 | 2024-07-01 | 400.00 | 7.52 | 7.53 |
| 7.36 SBI 11JUL39 | 2024-07-11 | 350.00 | 7.36 | 7.36 |
| 8.07 ICICI HFL 01OCT27 | 2024-07-01 | 287.75 | 8.10 | 8.09 |
| 8.10 BAJAJ FINANCE 10JUL26 | 2024-07-10 | 200.00 | 8.10 | 8.10 |
| 7.98 BAJAJ HFL 09SEP26 | 2024-07-09 | 100.00 | 8.00 | 8.00 |
| 8.23 SUNDARAM FINANCE 05JUL34 | 2024-07-05 | 90.00 | 8.22 | 8.22 |
| 10.50 SCNL 04JAN27 | 2024-07-04 | 56.08 | 11.61 | 11.02 |
| 10.05 MUTHOOTFINCORP 29APR30 | 2024-07-01 | 51.06 | 10.64 | 10.21 |
Source: Harmoney data analytics
Events This Week
July 16, Tuesday:
- US Advance monthly sales for retail & food services for June.
- US import & export price indexes for June.
- US manufacturing & trade for May.
July 17, Wednesday:
- US New Residential Construction for June.
- US Industrial Production and Capacity Utilization for June.
- US EIA Weekly Petroleum Status Report for Jul 12 week.
July 18, Thursday:
- US Unemployment Insurance Weekly Claims Report for Jul 13 week.
- US Weekly Export Sales.
July 19, Friday:
- US State Employment and Unemployment for June.
- India FX Reserves for Jul 8 week.
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