In August, India's trade deficit reached a 10-month high of $29.7 billion as gold imports doubled to $64.4 billion and exports fell for the second month in a row to $34.7 billion due to falling oil prices and global demand. Despite a 3% increase in imports, gold imports reached $10 billion in August due to stocking ahead of the holidays, decreasing world prices, and a July import tariff cut from 15% to 6%. August merchandise exports fell 9.3% to $34.7 billion. Additional factors that influenced merchandise exports included a significant decline in China, declining petroleum prices, a recession in advanced economies, and transportation- and logistics-related challenges.
Top 3 Leads Today
- Export share of manufacturing companies' sales nears a record low.
- WPI inflation drops to 4-month low of 1.31% in Aug on lower prices.
- India-EU trade pact talks next week, carbon tax to be discussed.
Indian Markets
- Money Markets Minute: The call rate closed at the RBI's marginal standing facility of 6.75% due to strong fund demand as liquidity tightened. The call money rate for two-day loans also settled at 6.75%, up from 6.00% for one-day loans on Monday. The weighted average call rate rose to 6.64% from 6.03% on Monday.
- Government Bond Brief: Government bond yields rose as traders took profits following five days of price gains. The 10-year benchmark 7.10%, 2034 gilt yield increased to 6.78% from 6.76% on Monday. Turnover was ₹538.15 billion, lower than Monday's ₹622.60 billion, according to RBI data.
- Corporate Bond Beat: Yields on corporate bonds in the secondary market remained steady as investors avoided aggressive moves ahead of the US Federal Open Market Committee's meeting. Total deals amounted to ₹47.39 billion, significantly higher than Monday's ₹7.51 billion.
- Forex Flash: The rupee appreciated by 11 paise to close at 83.75 against the US dollar, supported by a weaker greenback and a drop in crude oil prices. A decline in wholesale inflation to a four-month low, along with strong domestic market performance, also contributed to the rupee's gain. It closed stronger compared to Monday's 83.86.
- Stocks Spotlight: Benchmark indices Sensex and Nifty extended their gains for the second consecutive day, closing at record highs driven by telecom, auto, and construction stocks. The Sensex rose 0.1% to 83,068, while the Nifty gained 0.14% to close at 25,418.50.
International Markets
- US Stocks: On Tuesday, the benchmark indices, S&P 500 and the Dow closed almost flat after earlier advances. During the trading session, shares rose to a new high as investors braced for the first Federal Reserve rate cut in over four years. The S&P 500 closed 0.03% higher at 5,634.58. The Dow Jones declined 0.04% to 41,606.18. The tech-heavy Nasdaq closed 0.20% higher at 17,628.06, defying Wall Street expectations.
- Treasuries: Yields rose from 16-month lows following an unexpected increase in August US retail sales. According to a Commerce Department data released on Tuesday, US retail sales surprisingly increased 0.1% in August, indicating that the economy remained strong during the third quarter. Two-year treasury yield rose 4.4 basis points to 3.5986%, while the benchmark 10-year yield jumped 2.3 basis points to 3.644%.
- Currency: The US dollar climbed against most major currencies on Tuesday as better-than-anticipated retail sales data suggested a less aggressive stance by the Federal Reserve at its policy decision on Wednesday. The dollar jumped 0.87% to 141.830 against the yen after slumping after retail sales data. Euro fell 0.10% to $1.112125, near the year's high of $1.1201. The dollar index rose 0.199% to 100.90 against a basket of currencies.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 269 | 1280 | 701 | 604 | 50 |
| Financial Institution | 230 | 615 | 689 | 247 | - |
| Housing Finance Company | 230 | 312 | 139 | 16 | - |
| Investment Company | - | 530 | 6 | 101 | - |
| Private Sector Bank | 264 | - | - | 127 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.37 IIFCL 02SEP34 | 2024-09-02 | 760 | 7.36 | 7.34 |
| 7.45 AXISBANK 05SEP34 | 2024-09-05 | 490 | 7.44 | 7.36 |
| 9.65 ADANIENTLTD 09SEP27 | 2024-09-09 | 477 | 9.76 | 9.65 |
| 7.72 THDC 02SEP34 | 2024-09-03 | 355 | 7.72 | 7.71 |
| 9.25 MOFSL 03SEP32 | 2024-09-03 | 278 | 9.22 | 9.16 |
| 8.8570 SHRIRAMFIN 02SEP27 | 2024-09-02 | 200 | 9.02 | 9.02 |
| 9.03 CREDILA 04MAR26 | 2024-09-04 | 160 | 9.10 | 9.09 |
| 7.9918 L&T FINANCE 25MAR27 | 2024-09-05 | 125 | 8.02 | 8.02 |
| 7.36 IREDALTD 10SEP34 C 09SEP39 M | 2024-09-10 | 120 | 7.35 | 7.36 |
| 8.22 TATACAPITAL 13SEP34 | 2024-09-13 | 95 | 8.25 | 8.24 |
| 8.10 ABFL 07SEP29 | 2024-09-09 | 85 | 8.11 | 8.10 |
| 7.26 BOB 09SEP34 | 2024-09-09 | 80 | 7.26 | 7.26 |
| 8.0490 ADITYA BIRLA HFL 03DEC27 | 2024-09-05 | 70 | 8.04 | 8.07 |
| 8.8871 HEROFINCORP 06OCT26 | 2024-09-06 | 57 | 8.91 | 8.90 |
| 8.40 GODREJHSGFIN 05JAN28 | 2024-09-05 | 50 | 8.42 | 8.42 |
Source: Harmoney data analytics
Events This Week
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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