On Friday, the head of the RBI indicated that the country's growth potential is 7.5% or higher. "This year, we expect at the end of the year to record 7.2%," he said, with weaker first-quarter growth due to low government spending during the national election. Das stated that India's merchandise export growth was lower than expected due to weaker external demand but that services exports had improved. The forum was organised in Singapore in collaboration with the Swiss bank UBS.
Top 3 Leads Today
- India accuses Samsung, Xiaomi of colluding with Amazon, Flipkart.
- India's forex reserves rise $5.25 billion to new peak of $689.24 billion
- India sharply raises import tax on edible oils to support farmers.
Indian Markets
- Money Markets Minute: On Friday, the 4-day call money rate closed at 6.50%, close to the Reserve Bank of India's repo rate, as bank demand for funds increased due to advance tax outflows last week. On Monday, markets are closed for Id-e-Milad. The weighted average call rate jumped to 6.62% on Friday from 6.27% at the previous close.
- Government Bond Brief: Yields fell on Friday across the curve as traders expected a bigger rate cut of 50 basis points by the US Federal Reserve rate this week. The yield on the benchmark 10-year government bond finished at 6.79%, the lowest since March 30, 2022, on Friday. On Thursday, it settled at 6.81%. The yield of the 50-year government bond went below 7% for the first time, owing to robust demand from insurance firms and pension funds.
- Corporate Bond Beat: Yields on corporate bonds with maturities greater than five years fell by three to five basis points, reflecting a drop in government bond yields and US treasuries last week. Few mutual funds and banks were actively dealing in the secondary market, while insurance firms purchased longer-term securities. The National Stock Exchange and BSE together reported total deals of ₹91.58 billion, down from ₹99.42 billion on Thursday.
- Forex Flash: The rupee surged on Friday as Asian currencies benefited from the weak US dollar as media sources predicted a close Federal Reserve rate drop next week. The currency rose roughly 0.1% week on week, marking its highest weekly performance since the week ending June 25. The rupee closed at 83.8875 per dollar, up from 83.9650 in the previous session.
- Stocks Spotlight: The benchmark Indian indexes ended flat on Friday after reaching all-time highs the previous session and had their best week since the end of June ahead of the Federal Reserve's expected rate cut. Both indices increased by approximately 2% each week, their largest advances since the end of June. Consumer stocks rose 3%, while IT shares rose 2.8% last week ahead of a near-certain Fed rate cut next week.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE556F08KR0 | SIDBI 05SEP29 | 3665 | 7.46 |
| INE115A07QU9 | LICHSGFIN 23AUG29 | 1740 | 7.76 |
| INE261F08EJ7 | NABARD 06DEC29 | 1140 | 7.48 |
| INE134E08LD7 | PFCL 17SEP25 | 1000 | 7.74 |
| INE018A08BH2 | L&T 09DEC24 | 925 | 7.35 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE04VS07305 | 0% OXYZOFINSERV 24JAN25 | 38 | 9.68 |
| INE996U07230 | 10.40 SICREVACAP 23AUG26 | 35 | 12.99 |
| INE07HK07718 | 12.50 KRAZYBEESERVICES 19OCT25 | 29 | 12.5 |
| INE551U07316 | 11.37 SFISPL 28NOV25 | 23 | 11.92 |
| INE01YL07250 | 11.50 EARLYSALARY 05AUG25 | 23 | 12.61 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 7249 |
| 3Y | 8176 |
| 5Y | 8416 |
| 7Y | 280 |
| 10Y | 1285 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: Money markets are shut on Monday for Id-e-Milad. On Tuesday, the call money rate is likely to open around the RBI’s Repo rate as banks may increase their demand for funds. The call rate may trade in the 6.20-6.75% range on Tuesday.
- Government Bonds: On Tuesday, yields may remain steady as traders would wait for the US FOMC meeting on Tuesday and the Fed’s decision on interest rates later in the week. The 10-year benchmark yield is expected to trade in a narrow band of 6.75-6.85%.
- Corporate Bonds: Yields in the secondary market will stay stable, with further indications coming from movements in domestic government bonds and US treasuries. Trading is expected to be muted as market participants await the US Federal Reserve's rate reduction this week.
- Forex: The market will be closed on Monday. On Tuesday, the rupee will look for more signs from the dollar index and crude oil prices. Volumes will most likely stay low as traders hesitate from placing new bets ahead of the US Fed's policy decision on Wednesday. The rupee is projected to trade between 83.85 and 83.99 per dollar on Tuesday.
- Stocks: Macroeconomic data will drive domestic stock market moves this week, with the Federal Reserve's Open Market Committee meeting and decision on Wednesday. Investors will also be looking for US retail sales for August, which will be released on Tuesday. Domestically, investors will take fresh clues from August's Balance of Trade data on Monday and WPI inflation data on Tuesday.
Events This Week
September 16, Monday:
- India Trade Deficit Government for August.
September 17, Tuesday:
- US Advance Monthly Sales for Retail & Food Services for August.
- US Industrial Production and Capacity Utilization for August.
- US Manufacturing & Trade for July.
- India WPI Inflation for August.
September 18, Wednesday:
- US New Residential Construction for August.
- US Federal Reserve economic projections.
- US Interest rate decision.
- US Treasury International Capital Data for July.
- India M3 Money Supply for Sep 2 week.
September 19, Thursday:
- US International Transactions for Q2.
- US Unemployment Insurance Weekly Claims Report for Sep 14 week.
- US Weekly Export Sales.
- US Existing Home Sales for August.
September 20, Friday:
- US State Employment and Unemployment for August.
- India Bank Loan Growth for Sep 2 week.
- India FX Reserves Sep 13 week.
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