Daily Newsletter - 1st July 2024
Indian cricket got the monkey off its back by winning the T20 International World Cup in the West Indies over the weekend. Despite consistently playing good cricket across formats, India has eluded ICC tournament wins for a decade. Indian markets have had a breakout of pattern and are soaring, matching, and even beating the hot US market. The World Cup win may mean a breakout for Indian cricket as well, and more ICC tourney wins are up ahead, charting a new course.
Top 3 Leads Today
- SEBI raises basic demat account limit to Rs 10 lakh to boost participation
- Fiscal deficit for April-May is 3% of the entire FY25 target: Govt data
- FSIB recommends Challa Sreenivasulu Setty as the next chairman of SBI
Market Recap: The Week That Was
- Money Markets Minute: Last week, the call money market was marked by notable volatility due to the persistent liquidity deficit and increased demand for funds from banks. The RBI's interventions through repo auctions were crucial in providing temporary relief and stabilizing the rates. On Friday, the call money rate ended at the RBI's standing deposit facility rate of 6.25% as banks managed to meet their funding requirements for the end of the quarter.
- Government Bond Brief: The government bond market experienced upward pressure on yields this week due to significant selling by mutual funds and state-owned banks. Despite the RBI’s efforts to manage liquidity and stabilize the market, the need to generate cash for redemptions and profit bookings led to increased yields. On Friday, the 10-year benchmark ended at 7.01%.
- Corporate Bond Beat: It was a quiet week with stable yields and minimal activity. The lack of significant domestic and global triggers led market participants to adopt a cautious approach, resulting in a wait-and-watch strategy. Despite movements in government bond yields, the corporate bond market remained unaffected due to the low volume of trade.
- Forex Flash: The Indian rupee experienced a relatively stable week against the US dollar, with minor fluctuations driven by balanced market dynamics. Dollar sales by banks for foreign portfolio investors were offset by purchases for importers, resulting in a narrow trading range. On Friday, the rupee moved about 13 paise throughout the day and ended at 83.3825 a dollar.
- Stocks Spotlight: The stock market had a week of highs and lows, with benchmark indices reaching new lifetime highs before experiencing a pullback due to profit booking. Sector-specific performances, strong corporate earnings, and global cues played significant roles in the market's movements. On Friday, the Nifty 50 closed 0.1% lower at 24010.60 points, and the Sensex ended 0.3% lower at 79032.73 points.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE020B08ET5 | 7.79 REC 29NOV25 | 1925 | 7.74 |
| INE557F08FZ1 | 7.59 NHB 08SEP27 | 1640 | 7.60 |
| INE556F08KQ2 | 7.68 SIDBI 10SEP27 | 1195 | 7.69 |
| INE115A07QQ7 | 7.87 LICHSGFIN 14MAY29 | 1040 | 7.84 |
| INE040A08666 | 7.80 HDFC BANK 03MAY33 | 915 | 7.70 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE342T07494 | 10.50 NAVIFIN 18JUN27 | 35.95 | 11.16 |
| INE0U0U07027 | 10.80 MATRIXPHARMA 05AUG25 | 30.20 | 11.21 |
| INE556F08KL3 | 7.83 SIDBI 24NOV28 | 30.00 | 7.66 |
| INE756I08272 | 8.55 HDB PERP - C | 22.00 | 8.55 |
| INE109C07097 | 10.20 ARMANFINSERV 25JAN26 | 20.90 | 11.38 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 9021 |
| 3Y | 7136 |
| 5Y | 4657 |
| 7Y | 208 |
| 10Y | 2887 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: The one-day call money rate is expected to open above 6.50%, the RBI's repo rate, due to significant bank demand for funds, and trade in the 6.20-6.70% range during the Monday session.
- Government Bonds: Yields are expected to remain stable on Monday due to a lack of more domestic cues. Notwithstanding, investors anticipate that foreign funds may continue to pour money into government bonds since Indian government securities are now included in the JP Morgan emerging market debt index. The 10-year government bond is expected to trade at 6.97-7.05% on Monday.
- Corporate Bonds: On Monday, the yields of corporate bonds are expected to stay stable in the secondary market due to a lack of new signals. They will closely follow the movement of government bond yields for any further indications.
- Forex: The rupee is anticipated to open within a narrow range of 83.30-83.50 against the dollar on Monday. A sustained inflow of foreign funds following the inclusion of the India Government Bond Index would help, and this is expected to support the rupee against the greenback.
- Stocks: Indian equities are expected to open on a positive note on Monday. The near-term trajectory will be influenced by India's July budget, the monsoon trajectory, and the upcoming earnings season, which is expected to have a positive impact.
Events This Week
July 1, Monday
- US Manufacturing PMI for June
- US Global Manufacturing PMI for June
- India GST collections for June
- India Manufacturing PMI for June
July 2, Tuesday:
- US Domestic Auto Industry Sales for June
July 3, Wednesday:
- US International Trade in Goods & Services for May
- US Unemployment Insurance Weekly Claims Report for Jun 29 week
- US Services PMI for June
- US EIA Weekly Petroleum Status Report for Jun 28 week
- US Global Services PMI for June
- US financial markets close early for Independence Day
- US Federal Open Market Committee meeting minutes and economic forecast
- India Services and Composite PMI for June
July 4, Thursday:
- US Independence Day, Financial markets closed
July 5, Friday:
- US Employment Report for June
- US Weekly Export Sales
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