The Federal Reserve has adopted a more measured approach after delivering its third consecutive rate cut, lowering interest rates by a quarter point as expected. Fed Chair Jerome Powell highlighted that the central bank no longer sees the need for rapid action, having already reduced its benchmark rate by a full percentage point from its peak. “Our policy stance is now much less restrictive, which enables us to be more deliberate in considering further adjustments,” Powell explained after the decision. Officials also signalled fewer rate cuts in 2025.
Top 3 Leads Today
- SEBI clarifies norms for FPI use of offshore derivative instruments.
- Govt's Apr 1-Dec 17 net direct tax collection ₹15.83 trillion, up 16.5% on year.
- US Trump's plan to reciprocate tariff may violate WTO norms, says DGFT.
Indian Markets
- Money Markets Minute: The call rate rose to 5.85% on Wednesday, up from 5.75% the previous day, but remained below the RBI's Standing Deposit Facility rate of 6.25%, as banks met funding needs early. The weighted average call rate held steady at 6.69%, marginally lower than Tuesday’s 6.70%.
- Government Bond Brief: Yields ended slightly lower on Wednesday as markets awaited the US Federal Reserve's monetary policy decision and 2025 guidance. The 10-year benchmark 6.79%, 2034 bond closed at a 6.7465% yield, slightly down from the previous 6.7588. Trading activity remained subdued, with turnover at ₹221.60 billion, down from ₹278.10 billion, as investors also looked ahead to Friday's debt supply and the RBI's December monetary policy meeting minutes.
- Corporate Bond Beat: Corporate bond yields in the secondary market stayed range-bound Wednesday as participants focused on the primary market. Trading was subdued ahead of the US Fed's rate decision. Transactions totalled ₹99.64 billion, down from ₹115.85 billion on Tuesday.
- Forex Flash: The rupee closed at a record low against the dollar on Wednesday, pressured by increased dollar purchases from banks on behalf of importers. After hitting an all-time low of 84.9575 during the session, the domestic currency settled marginally higher at 84.9525 per dollar. This marked a further decline from its previous close of 84.8950 on Tuesday.
- Stocks Spotlight: The Indian stock market remained under pressure as the bears tightened their hold, with benchmark indices extending their losing streak for a third consecutive session on Wednesday. Investor caution ahead of the Federal Reserve's rate decision weighed heavily on sentiment. At the close, the Sensex fell by 0.62% to settle at 80,182.20, while the Nifty dropped 0.56% to finish at 24,198.85.
International Markets
- US Stocks: Wall Street tumbled on Wednesday, with the Dow plunging over 1,100 points after the Federal Reserve delivered a rate cut as anticipated but hinted at slowing the pace of cuts moving forward. The Dow dropped 2.58% to 42,326.87, marking its longest losing streak since 1974 and its sharpest daily decline since August. The S&P 500 and Nasdaq also suffered steep losses, falling 2.95% and 3.56% respectively.
- Treasuries: Yields climbed on Wednesday as the Federal Reserve cut its target rate by 25 basis points but signalled a slower pace of easing in 2025. The Fed now projects just two rate cuts next year, down from four anticipated in September, setting the stage for a potential pause in January. The yield on 10-year Treasuries rose 11.3 basis points to 4.498%, while the 30-year bond yield gained 7.3 basis points to 4.6525%.
- Currency: The dollar rallied against major world currencies following the Fed’s revised rate outlook and assurances from Chair Jerome Powell about the economy's resilience and progress on inflation. The dollar index climbed 1.09% to 108.09, with the euro slipping 1.13% to $1.037 and the dollar gaining 0.76% against the yen to 154.63.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 1401 | 1875 | 172 | 917 | 28 |
| Financial Institution | 115 | 910 | 548 | 353 | - |
| Housing Finance Company | - | 355 | 347 | 327 | - |
| Private Sector Bank | 155 | 190 | 100 | 402 | - |
| Diversified | 425 | - | - | - | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2027 | 2024-12-06 | 660 | 9.41 | 9.68 |
| 7.69 LIC 11DEC26 | 2024-12-12 | 375 | 7.69 | 7.69 |
| 7.23 DME DEVELOPMENT LIMITED 11DEC2034 | 2024-12-11 | 350 | 7.36 | 7.36 |
| 7.75 SUNDARAM FINANCE 11DEC26 | 2024-12-13 | 275 | 7.74 | 7.75 |
| 7.92 INDIA INFRADEBT LIMITED 06JUN2030 | 2024-12-06 | 273 | 7.93 | 7.90 |
| 7.09 IRFC 16DEC34 | 2024-12-16 | 270 | 7.11 | 7.16 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2030 | 2024-12-06 | 248 | 9.46 | 9.10 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2029 | 2024-12-06 | 236 | 9.48 | 8.76 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 24NOV2034 | 2024-12-06 | 163 | 9.65 | 9.04 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 29DEC2028 | 2024-12-06 | 155 | 9.65 | 9.67 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 30DEC2033 | 2024-12-06 | 149 | 9.66 | 9.11 |
| 9.00 CREDILA FINANCIAL SERVICES LIMITED 13DEC2029 | 2024-12-13 | 141 | 9.09 | 9.10 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2032 | 2024-12-06 | 141 | 9.64 | 9.10 |
| 9.80 IIFL FINANCE - C 03DEC26 M | 2024-12-03 | 136 | 10.64 | 10.16 |
| 11.25 INDEL MONEY 06APR26 | 2024-12-06 | 135 | 12.52 | 13.09 |
| 9.35 TELANGANA STATE INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED 31DEC2031 | 2024-12-06 | 131 | 9.66 | 9.10 |
| 7.7215 BAJAJ FIN 26MAR27 | 2024-12-10 | 115 | 7.75 | 7.75 |
| 10.97 HELLA INFRA MARKET LIMITED 06JUN2026 | 2024-12-06 | 83 | 14.77 | 16.50 |
| 10.30 KRAZYBEE 12JUN26 | 2024-12-12 | 77 | 11.89 | 12.28 |
| 7.8461 ABHFL 10MAR28 | 2024-12-12 | 50 | 7.86 | 7.86 |
Source: Harmoney data analytics
Events This Week
December 19, Thursday:
- US 3rd estimate GDP for Q3.
- US Revised Corporate Profits for Q3.
- US Unemployment Insurance Weekly Claims Report for Dec 14 week.
- US Weekly Export Sales.
- US Existing Home Sales for November.
December 20, Friday:
- US State Quarterly Personal Income for Q3.
- US GDP by State for Q3.
- US State Employment and Unemployment for November.
- India FX Reserves for Dec 9 week.
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