The Reserve Bank of India's October State of the Economy report acknowledged a slowdown in some high-frequency indicators but voiced optimism for a recovery, supported by consumption demand over the holiday season. “In India, aggregate demand is poised to shrug off the temporary slowdown in momentum in the second quarter of 2024-25 as festival demand picks up pace and consumer confidence improves,” the research released on Monday said. Despite international tensions, the analysis finds that India's development prospects is bolstered by strong domestic forces.
Top 3 Leads Today
- Reserve Bank of India net sold $6.5 billion in August, shows data.
- Foreign investors infuse $436 million in real estate in Q3 2024, up 139%: Report.
- RBI says August gross FDI inflows $8.61 billion vs $5.22 billion July, $4.97 billion year ago
Indian Markets
- Money Markets Minute: The call rate closed below the RBI's standing deposit facility rate of 6.25%, as demand for funds from banks eased towards the end of the session. The rate ended at 5.75%, against 6.55% for two-day loans on Saturday. The weighted average call rate was 6.50%, up from 6.23% on Saturday.
- Government Bond Brief: Yields rose after US treasury yields hit a nearly three-month high, and traders trimmed their portfolios amid fading hopes of a December rate cut by the Monetary Policy Committee following RBI Governor’s comments on Friday. The 10-year benchmark 7.10% 2034 bond ended with a yield of 6.83%, up from 6.82% on Friday. Trading turnover decreased to ₹474.80 billion, compared with ₹605.15 billion on Friday.
- Corporate Bond Beat: Following the RBI Governor's comments on Friday, which dampened expectations of a rate cut in December, corporate bond yields rose by 3-5 basis points across various tenures in the secondary market. Trading activity increased, with deals totalling ₹59.13 billion, compared with ₹50.99 billion on Friday.
- Forex Flash: The rupee ended flat against the dollar as dollar sales by banks, likely on behalf of the RBI, balanced out purchases by foreign investors withdrawing from domestic equities and importers. The currency closed at 84.0725 per dollar, unchanged from Friday's close, and traded within a narrow range of less than 3 paise throughout the day.
- Stocks Spotlight: After a sharp recovery in the previous session, the market was pressured as selling persisted across sectors, except for autos. Despite positive global cues, Indian indices opened strongly but quickly lost momentum within the first hour, trading flat during the first half. By the close, the Sensex had declined by 0.09% to 81,151.27, while the Nifty fell by 0.45% to 24,741.50.
International Markets
- US Stocks: The Dow and S&P 500 closed lower on Monday, reversing Friday's record-high finishes and six consecutive weekly advances as investors concerned about high valuations awaited reports from large corporations. The Dow Jones Industrial Average slid 0.80% to 42,931.60, while the S&P 500 dropped 0.18% to 5,853.98. The Nasdaq Composite increased 0.27% to 18,540.01, led by semiconductor giant Nvidia, which rose 4.14% to close at a record high of $143.71.
- Treasuries: Yields climbed on Monday after Fed officials stated that buoyant US economic data will lead to modest rate decreases by the Federal Reserve. Lorie Logan of the Fed official from Dallas said Monday she expects additional modest rate decreases and that the Fed may continue to diminish its balance sheet., Minneapolis Fed President Neel Kashkari predicted "modest" interest rate decreases over the next several quarters, but a strong labour market deterioration could prompt speedier cuts. The benchmark US 10-year note yield rose to 4.19%.
- Currency: The dollar rose on Monday, boosted by a rise in US bond yields, as a string of strong US economic data suggested the Federal Reserve could be patient in decreasing rates while markets braced for the Nov. 5 presidential election. The euro fell 0.46% to $1.0815, while the pound slipped 0.51% to $1.2982. The dollar rose 0.86% against the Japanese yen, reaching 150.79.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| Financial Institution | 173 | 808 | 379 | 441 | - |
| NBFC | 190 | 393 | 260 | 243 | 345 |
| Private Sector Bank | 75 | 300 | - | 146 | - |
| Housing Finance Company | 70 | 52 | 81 | 11 | 65 |
| Life Insurance | - | - | - | 240 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.7951 BAJAJ FIN 10DEC27 | 2024-10-09 | 550 | 7.77 | 7.81 |
| 8.05 HDFC LIFE 09OCT29 C 09OCT34 M | 2024-10-09 | 550 | 8.04 | 8.04 |
| 9.50 HINDUJA HOUSING 11OCT39 | 2024-10-11 | 330 | 9.23 | 8.58 |
| 8.24 M&M FINANCE 06OCT34 | 2024-10-08 | 110 | 8.19 | 8.15 |
| 9.49 KIIF 08OCT34 | 2024-10-08 | 73 | 9.65 | 9.45 |
| 9.49 KIIF 08OCT29 | 2024-10-08 | 62 | 9.88 | 9.83 |
| 9.50 HERO FINCROP PERP 11NOV34 C | 2024-10-11 | 55 | 9.48 | 9.48 |
| 7.9610 HDB FINANCE 05JAN28 | 2024-10-14 | 50 | 7.96 | 7.96 |
| 8.14 TATA PROJECTS 08OCT27 | 2024-10-09 | 50 | 8.14 | 8.14 |
Source: Harmoney data analytics
Events This Week
October 22, Tuesday:
- US IMF World Economic outlook.
- US State employment and unemployment.
- US IMF Global financial stability report.
- US G20 finance and central bank deputies meeting.
October 23, Wednesday:
- US Existing home sales for September.
- India RBI MPC meeting minutes.
October 24, Thursday:
- US Weekly export sales.
- US Unemployment insurance weekly claims report for Oct 19 week.
- US Flash Services PMI for October.
- US Flash Manufacturing PMI for October.
- US New Residential Sales for September.
- India Global manufacturing PMI for October.
- India Services PMI for October.
October 25, Friday:
- US Advance report on durable goods for September.
- India FX Reserves for Oct 18 week.
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