SEBI approved a new asset class on Monday to give fund managers and potential investors with a higher risk appetite more options. SEBI explained that the new asset class aims to reduce the proliferation of unregistered and unauthorised investment schemes, which often promise unrealistic high returns and exploit investors' expectations for better yields, posing financial risks. In addition, the markets regulator approved the liberalized MF Lite framework, which is designed for fund houses that exclusively introduce passively managed schemes. The board made another substantial change by reducing the timeframe for rights issues from the current 317 working days to a mere 23.
Top 3 Leads Today
- India Apr-Aug fiscal deficit ₹4.352 trillion, 27.0% of FY25 target.
- India Apr-Jun CAD widens to $9.74 billion after surplus in Jan-Mar.
- Core sector contracts 1.8% in a first in 42 months, shows govt data.
Indian Markets
- Money Markets Minute: The rate for one-day loans settled at 6.24%, just below the RBI's standing deposit facility rate of 6.25%, due to low demand from banks amid surplus liquidity following month-end inflows. The weighted average call rate was 6.68%, up from 6.53% on Friday.
- Government Bond Brief: Yields fell as traders bought bonds, seeing Friday's sell-off as excessive and speculating on potential monetary easing in October. The 10-year benchmark 7.10%, 2034 gilt ended at 6.75% on Monday, down from 6.76% on Friday. Turnover dropped to ₹502.95 billion from ₹856.45 billion.
- Corporate Bond Beat: Yields on corporate bonds in the secondary market ended steady as investors flocked to the primary market where REC sought bids for its zero-coupon bond issue. Deals aggregating to only ₹97.69 billion were recorded on the exchanges, compared with ₹124.38 billion on Friday.
- Forex Flash: The rupee fell to a two-week low, closing at 83.80 against the dollar, as banks consistently bought dollars on behalf of oil marketing companies and other importers. This marked a decline of 11 paise from the previous close.
- Stocks Spotlight: Equity indices closed sharply lower as investors booked profits after the recent rally. Weighed down by weak global cues, markets opened lower and extended losses, with broad-based selling except in metal and media stocks. The Nifty 50 fell 1.4% to 25,810.85, while the Sensex fell 1.5% to 84,299.78.
International Markets
- US Stocks: On Monday, the S&P 500 and the Dow rose to all time high. The S&P 500 rebounded from a minor setback after Federal Reserve Chair Jerome Powell stated the central bank is not in a hurry to decrease interest rates. Powell told a National Association for Business Economics conference in Nashville, Tennessee, that if the economy evolves as projected, he expects two additional rate reduction this year totalling 50 basis points. The Dow Jones index gained 0.04% and the S&P 500 rose 0.42%, while the Nasdaq Composite rose 0.38%.
- Treasuries: Yields closed higher, particularly at the short end of the curve, where the two-year yield rose by 10 basis points, and traders adjusted estimates for the Fed's November meeting closer to a 25-basis point cut from 50. Fed Chair Jerome Powell downplayed some of the more intense hopes for future rate reduction on Monday, saying his base case is for another 50 basis points of easing this year and that the central bank will reach neutral "over time.".
- Currency: The dollar surged on Monday as Federal Reserve Chair Jerome Powell took a more hawkish stance on the economy, prompting traders to reduce expectations that the US central bank will drop interest rates by 50 basis points again at its next meeting. Powell said recent revisions to economic growth, savings rates, and personal income data reduced "downside risks" the Fed has been monitoring. The dollar index was up 0.42%, to 100.86 on Monday.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 304 | 1674 | 1101 | 1092 | 735 |
| Financial Institution | 750 | 611 | 41 | 1277 | - |
| Private Sector Bank | 519 | 220 | 10 | 287 | - |
| Other Utilities | - | 2 | 10 | - | 540 |
| Housing Finance Company | 50 | 30 | 359 | 40 | 33 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.65 LIC HOUSING 19AUG31 | 2024-09-19 | 1600 | 7.64 | 7.58 |
| 7.33 SBI 20SEP34 C 20SEP39 M | 2024-09-20 | 1075 | 7.31 | 7.31 |
| 7.85 TATA POWER RENEWABLE 19SEP34 | 2024-09-19 | 900 | 7.84 | 7.80 |
| 13.83 SHREM AJANTA INFRASTRUCTURE PRIVATE LIMITED 26SEP2027 | 2024-09-26 | 486 | 13.83 | 13.83 |
| 0% CYQURE INDIA PRIVATE LIMITED 17MAR2028 | 2024-09-17 | 359 | 14.29 | 14.45 |
| 8.40 CHOLAINVFIN 18SEP27 | 2024-09-18 | 270 | 8.40 | 8.40 |
| 7.95 ICICI HFL 20DEC27 | 2024-09-19 | 195 | 7.98 | 7.98 |
| 7.86 TCHFL 21SEP29 | 2024-09-23 | 150 | 7.85 | 7.85 |
| 9.90 SAMMAAN CAPITAL LIMITED 25SEP2027 | 2024-09-25 | 75 | 10.10 | 9.90 |
| 9.50 INCRED 18SEP26 | 2024-09-19 | 64 | 9.90 | 9.73 |
| 7.94 ICICI HFL 19SEP29 | 2024-09-19 | 60 | 7.93 | 7.93 |
| 8.45 GODREJHSGFIN 18SEP29 | 2024-09-18 | 50 | 8.44 | 8.45 |
Source: Harmoney data analytics
Events This Week
October 1, Tuesday:
- US Construction spending for August.
- US Global manufacturing PMI for September.
- India Manufacturing PMI for September.
October 2, Wednesday:
- US Metropolitan area employment and unemployment for August.
- M3 Money supply for Sep 20 week.
October 3, Thursday:
- US Unemployment insurance weekly claims report for Sep 28 week.
- US Weekly Export sales.
- US Services PMI for September.
- US Manufacturers' Shipments, Inventories & Orders for August.
- US Global Services PMI for September.
October 4, Friday:
- US Employment report for September.
- India Composite PMI for September.
- India Bank loan growth for Sep 20 week.
- India Deposit growth for Sep 20 week.
- India FX reserves for Sep 27 week.
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