During a high-level seminar on "Central Banking at Crossroads" on Monday, Reserve Bank of India Deputy Governor Michael Debabrata Patra stated that the domestic headline retail inflation is anticipated to consistently meet the 4% objective in FY26. On Tuesday, the RBI website published the speech. "In July and August 2024, inflation fell below the target. He predicted that it would average 4.5% in 2024–25 and then permanently align with the target in 2025–26. Despite the sluggish disinflation process, the central bank has been stressing its significance. For the current fiscal year, the RBI has predicted inflation of 4.5%, presuming a normal monsoon and stable supply.
Top 3 Leads Today
- RBI looking to establish a global model of risk-focused supervision: DG.
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- MoSPI invites research proposals to improve GDP, IIP, housing index.
Indian Markets
- Money Markets Minute: The call rate ended at 5.75%, below the RBI's standing deposit facility rate of 6.25%, due to low demand for funds from banks amid ample liquidity in the system. Both the one-day call rate and the weighted average call rate remained unchanged from Monday, with the weighted average call rate steady at 6.42%.
- Government Bond Brief: Yields fell as easing concerns over the West Asia crisis led to a drop in crude oil prices, which supported bond markets. Additionally, a slight decline in US Treasury yields helped boost gilt prices. The yield on the 10-year benchmark 7.10%, 2034 bond decreased to 6.77%, down from 6.78% on Friday. Trading volumes increased, with ₹498.65 billion recorded, up from ₹387.45 billion on Monday.
- Corporate Bond Beat: Lack of significant market triggers and low trading volumes kept corporate bond yields steady in the secondary market. Total deals amounted to ₹71.96 billion, slightly up from ₹71.47 billion recorded on Monday.
- Forex Flash: The rupee ended mostly stable against the dollar as consistent dollar sales by banks, likely on behalf of the RBI and some exporters, balanced out the effect of a stronger dollar index. The rupee closed at 84.0375 per dollar, after briefly touching a record low of 84.0750 during the day. The currency traded within a narrow 5 paise range. On Monday, the rupee had closed at 84.0600 per dollar.
- Stocks Spotlight: Benchmark indices reversed early gains and closed lower due to losses in select heavyweight financial and oil stocks. The Nifty 50 dropped 0.3% to 25,057.35 points, while the Sensex declined 0.2%, ending at 81,820.12 points.
International Markets
- US Stocks: All three major stock indexes fell on Tuesday, with the technology-heavy Nasdaq falling 1% as chip stocks fell on demand fears and the energy sector falling 3% as oil prices plunged. Nvidia shares slumped 4.7% after a record finish on Monday and a media speculation that the Biden administration may ban the US AI chip exports. After a media report stated Israel will not strike Iranian oil targets, crude prices plunged 3%, the greatest one-day percentage drop since early October 2023, lowering demand expectations. The Dow declined 0.75% to 42,740.42, S&P 500 slid 0.76% to 5,815.26, and Nasdaq fell 1.01% to 18,315.59.
- Treasuries: Yields moved lower, halting after reaching a two-and-a-half-month high in response to dismal the US manufacturing data from the New York Federal Reserve. The yield on benchmark US 10-year notes declined 3.7 basis points to 4.036%, from 4.073% Friday. The 30-year bond yield fell by 5.8 basis points to 4.3237%, from 4.382% Friday.
- Currency: The US dollar moved higher against most major currencies on Tuesday, resuming the latest rally that propelled it to more than two-month highs, spurred by expectations that the Federal Reserve will cut interest rates gradually over the next year and a half. The dollar index, which gauges the value of the dollar against a basket of currencies, including the euro and the yen, increased by 0.06% to 103.24. On the other hand, the euro declined by 0.2% to $1.0887. Against the yen, the dollar fell 0.37% to 149.2.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 402 | 1566 | 256 | 492 | 265 |
| Financial Institution | 390 | 1111 | 100 | 102 | - |
| Private Sector Bank | 135 | 435 | - | 1 | - |
| Diversified | 75 | 300 | 50 | 100 | - |
| Housing Finance Company | - | 25 | 23 | 152 | 40 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 8.78 MUTHOOT FIN 04OCT29 | 2024-10-04 | 590 | 8.77 | 8.77 |
| 7.7951 BAJAJ FIN 10DEC27 | 2024-10-09 | 550 | 7.77 | 7.81 |
| 7.56 BAJAJ HOUSING 04OCT34 | 2024-10-04 | 176 | 7.56 | 7.56 |
| 9.35 ADANI AIRPORT 08SEP28 | 2024-10-01 | 125 | 9.76 | 9.76 |
| 8.24 M&M FINANCE 06OCT34 | 2024-10-08 | 110 | 8.19 | 8.15 |
| 7.70 BAJAJ FIN 04OCT34 | 2024-10-04 | 100 | 7.69 | 7.69 |
| 10.90 EARLYSALARY 27MAR26 | 2024-09-30 | 80 | 12.41 | 11.50 |
| 10.80 WHIZDM FINANCE PRIVATE LIMITED 31MAR2026 | 2024-09-30 | 80 | 12.02 | 12.00 |
| 8.47 BOBCARD LIMITED PERP 30SEP2034 CALL | 2024-09-30 | 75 | 8.46 | 8.46 |
| 9.60 HERO WIND ENERGY 04OCT27 | 2024-10-04 | 65 | 10.08 | 10.70 |
| 9.49 KIIF 08OCT34 | 2024-10-08 | 51 | 9.57 | 9.83 |
| 8.14 TATA PROJECTS 08OCT27 | 2024-10-09 | 50 | 8.14 | 8.14 |
| 7.7810 KMPL 17SEP29 | 2024-10-04 | 50 | 7.78 | 7.78 |
Source: Harmoney data analytics
Events This Week
October 16, Wednesday:
- US Export and import price index for September.
- India Trade deficit government for September.
- India M3 Money supply.
October 17, Thursday:
- US Jobless claims for Oct 4 week.
- US Retail sales for September.
- US Industrial production for September.
October 18, Friday:
- India Bank loan growth for Sep 30 week.
- India FX reserves Oct 7 week.
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