On Tuesday, Reserve Bank of India Governor Shaktikanta Das ruled out lowering the policy repo rate due to July's headline inflation drop, citing a higher statistical basis.Das told NDTV Profit that the RBI should wait for inflation to fall to 4% on a sustainable basis before reacting to a one-time incident. We mean long-term inflation targeting. For alignment, it should be around 4%. It shouldn't be unique. Inflation of 3.5% in July does not indicate a resolution, according to Das.
Top 3 Leads Today
- India could be $55 trillion economy by 2047 with 8% growth: IMF official.
- RBI asks banks to monitor credit-deposit gap to avoid liquidity issues.
- GST intelligence detects tax evasion of ₹1.2 trillion so far since 2020.
Indian Markets
- Money Markets Minute: The call money rate closed below the RBI's repo rate of 6.50%, as comfortable liquidity conditions eased banks' demand for funds, even amid GST outflows. The one-day call rate ended at 6.40%, up from 5.85% on Monday, while the weighted average call rate was 6.50%, slightly higher than Monday's 6.49%.
- Government Bond Brief: Yields fell as foreign portfolio investors purchased Indian bonds following their inclusion in global bond indices. Indian government bonds gain 1% weightage on JP Morgan Government Bond Index – Emerging Market suite every month. The 10-year benchmark 7.10%, 2034 bond fell to 6.86% from 6.87% on Monday. Trading turnover increased to ₹606 billion from ₹500.15 billion on Monday.
- Corporate Bond Beat: Corporate bond yields in the secondary market remained steady as investors held back from making significant moves due to a lack of new triggers. Mutual funds were active on both the buying and selling sides, while some banks were seen selling. Trading volumes increased, with deals totalling ₹123.05 billion, up from ₹90.04 billion on Monday.
- Forex Flash: The rupee closed at a two-week high against the dollar, supported by a decline in the dollar index and dollar sales by banks on behalf of foreign portfolio investors. The rupee traded within a 12-paise range before settling at 83.7925 per dollar, compared with Monday's close of 83.8700.
- Stocks Spotlight: Benchmark indices closed higher, driven by gains in banking and financial services shares, which rebounded after Monday's decline. The indices opened higher, following global trends, and maintained their momentum throughout the session. The Sensex rose 0.47% to 80,802.86, while the Nifty climbed 0.51% to 24,698.80.
International Markets
- US Stocks: On Tuesday, all three benchmark indices sank, capping a multi-session rise fuelled by recession fears. Nasdaq and S&P 500 snapped eight-session winning streaks and fell 0.33% and 0.20%. Tuesday saw the Dow Jones index fall 0.15%. On Wednesday, the Labor Department's preliminary benchmark changes to its 12-month employment data through March. A significant data downgrade could affect the data-dependent Federal Reserve's policy.
- Treasuries: Yields fell on Tuesday before of Chair Jerome Powell's Jackson Hole address on Friday, which could help forecast US interest rates. Fed policymakers have recently hinted at easing in September, preparing markets for a similar tone from Powell and other speakers at the annual meeting of global central bankers in Jackson Hole, Wyoming. In keeping with projections for lower interest rates, the benchmark 10-year US treasury yield dropped to 3.818%.
- Currency: The dollar fell to an eight-month low as investors anticipated that the US Federal Reserve would deliver more signals of upcoming interest rate cuts. The dollar fell against the euro to $1.12775 on Tuesday. Sterling briefly reached its highest level in over a year, last buying $1.30540. The dollar index ended at 101.41 on Tuesday, the lowest since January.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 2421 | 1412 | 554 | 1324 | 6 |
| Financial Institution | 401 | 525 | 600 | 1389 | 280 |
| Diversified | - | - | 50 | 500 | - |
| Telecom - Cellular & Fixed line services | - | - | - | 406 | - |
| Housing Finance Company | 55 | 80 | 60 | 145 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.36 NBFID 12AUG44 | 2024-08-13 | 1285 | 7.35 | 7.35 |
| 8.25 SBICARDS 08AUG34 | 2024-08-08 | 903 | 8.24 | 8.24 |
| 8.00 IIDL 29OCT29 | 2024-08-13 | 606 | 8.01 | 8.00 |
| 7.80 BOM 05AUG34 | 2024-08-05 | 408 | 7.77 | 7.78 |
| 8.30 SMFG 30JUN27 | 2024-08-05 | 250 | 8.38 | 8.38 |
| 7.98 IIDL 05AUG34 | 2024-08-05 | 220 | 7.97 | 7.98 |
| 0% 360ONEPRIME 13MAR26 | 2024-08-08 | 164 | 9.00 | 9.00 |
| 9.75 SAMMAAN CAPITAL LIMITED 12APR2028 | 2024-08-12 | 150 | 9.65 | 9.75 |
| 7.95 IIDL 13AUG39 | 2024-08-13 | 125 | 7.95 | 7.94 |
| 8.05 AXISFIN 25APR28 | 2024-08-09 | 119 | 8.02 | 8.03 |
| 7.99 RCFL 07AUG27 | 2024-08-07 | 100 | 7.99 | 7.99 |
| 8.28 PNB HFL 30DEC26 | 2024-08-07 | 100 | 8.31 | 8.31 |
| 0% EQUINOX INDIA DEVELOPMENTS LIMITED 05SEP2025 | 2024-08-05 | 80 | 11.93 | 11.93 |
| 7.87 SUMMITDIGITELLTD 15DEC29 C 15MAR30 M | 2024-08-05 | 75 | 8.15 | 8.15 |
| 8.90 MUTHOOT FINANCE 07OCT27 | 2024-08-07 | 75 | 8.92 | 8.92 |
| 7.98 SUNDARAMHFL 04SEP26 | 2024-08-05 | 75 | 7.96 | 7.96 |
| 8.49 ADITYA BIRLA SUN LIFE INSURANCE LTD - C 12AUG2034 M | 2024-08-12 | 50 | 8.48 | 8.48 |
Source: Harmoney data analytics
Events This Week
August 21, Wednesday:
- US Advance quarterly services for Q2.
- US EIA weekly petroleum status report for Aug 16 week.
- US FOMC meeting minutes.
- India M3 money supply for Aug 9 week.
August 22, Thursday:
- US Unemployment insurance weekly claims report for Aug 17 week.
- US Weekly export sales.
- US PMI data for August.
- US Existing home sales for July.
- India PMI data for August.
August 23, Friday:
- US New residential sales for July.
- India Bank loan growth for Aug 9 week.
- India deposit growth for Aug 9 week.
- India Foreign exchange reserves for Aug 16 week.
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