India's business activity slowed to its slowest level in nine months in September. This was due to a slight decline in demand and a rise in costs. At the same time, jobs in the services sector grew at the fastest pace in two years, according to a survey. The HSBC flash India Composite Purchasing Managers' Index, which is calculated by S&P Global, fell to 59.3 this month from 60.7 in August. However, activity remained strong, extending the expansionary run to nearly three years. The dominating services industry's index fell to 58.9 from 60.9 in August, its lowest since November, while manufacturing fell to 56.7 from 57.5, an eight-month low.
Top 3 Leads Today
- Fresh formal hirings increase in July by 2.5% to 1.05 million: EPFO data.
- S&P arm sees loan-to-deposit ratios of Indian banks improving.
- Only govt funding climate invest to hit India fisc strength, says Moody's.
Indian Markets
- Money Markets Minute: The rate ended significantly below the RBI's standing deposit facility rate of 6.25%, due to low demand for funds from banks in the latter part of the session. The one-day loan rate settled at 5.75%, compared with 6.40% for two-day loans on Saturday. The weighted average call rate rose to 6.68%, up from 6.29% on Friday.
- Government Bond Brief: Yields rose as the 10-year US Treasury note yield rose toward the end of the trading session. Gilt prices were mostly stable, with some volatility at the beginning and end of the day influenced by US yields. The 10-year benchmark gilt closed at 6.77%, up from 6.76% on Friday. Market turnover reached ₹507.00 billion, down from ₹580.75 billion on Friday.
- Corporate Bond Beat: The secondary corporate bonds market remained sluggish as investors avoided large bets amid a lack of significant domestic triggers. Corporate bond yields held steady, reflecting movements in the government bond market. Deals worth ₹148.3 billion recorded on the exchanges, up from ₹115.8 billion on Friday.
- Forex Flash: The rupee nearly lost all its gains against the dollar as state-owned banks bought the dollar, likely for the RBI and importers. Additionally, a rise in the dollar index during European trading weighed on the rupee. After peaking at 83.4350, it settled at 83.5525, slightly up from 83.5625 previously, moving within a 12-paise range.
- Stocks Spotlight: Indices hit new lifetime highs, buoyed by optimism for increased foreign investment following last week’s US Federal Reserve interest rate cut. Anticipation of upcoming rate cuts by the Reserve Bank of India also boosted stock prices. At close, the Sensex rose 0.45% to 84,928.61, while the Nifty gained 0.57% to reach 25,939.
International Markets
- US Stocks: Equities rose slightly on Monday after Fed policymakers and stable factory activity data boosted the market after last week's sharp rally when the Fed lowered interest rates. In September, the economic activity remained stable, while average prices for goods and services rose at the quickest rate in six months, likely indicating an increase in inflation in the coming months. The Dow was up 0.15%, S&P 500 rose 0.28%, and Nasdaq gained 0.14%.
- Treasuries: Yields climbed as bond investors priced in a short-term recession in the world's largest economy. Three Fed officials indicated Monday that the cut was intended to maintain the economy's emerging and healthy equilibrium. The yield curve, a bellwether of the US economic prospects, steepened to positive 17.9 basis points, the sharpest since June 2022. The 10-year US note yield jumped 2.3 basis points to 3.751% from 3.728% Friday.
- Currency: The dollar gained against the euro after economic activity indicators for the eurozone economy disappointed, while the US data indicated activity remained stable. According to S&P Global, euro zone business activity fell substantially this month. On Monday, S&P Global said that its flash US Composite PMI Index, which includes manufacturing and services, was unchanged at 54.4 this month from 54.6 in August. The dollar index rose 0.14% to 100.92 and the euro fell 0.45% to $1.1112
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 | 1985 | 1915 | 212 | 26 | - |
| NBFC | 1444 | 2246 | 28 | 340 | 9 |
| Housing Finance Company | 1610 | 261 | 68 | 688 | - |
| Private Sector Bank | 886 | 10 | - | 177 | - |
| Integrated Power Utilities | - | - | 1 | 903 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.85 TATA POWER RENEWABLE 19SEP34 | 2024-09-19 | 900 | 7.84 | 7.80 |
| 7.65 LIC HOUSING 19AUG31 | 2024-09-19 | 575 | 7.65 | 7.65 |
| 9.65 ADANIENTLTD 09SEP27 | 2024-09-09 | 555 | 9.74 | 9.64 |
| 7.24 INDIAN BANK 13SEP34 | 2024-09-13 | 260 | 7.23 | 7.23 |
| 7.26 BOB 09SEP34 | 2024-09-09 | 200 | 7.24 | 7.25 |
| 8.22 TCL 13SEP34 | 2024-09-13 | 146 | 8.23 | 8.14 |
| 7.36 IREDALTD 10SEP34 C 09SEP39 M | 2024-09-10 | 145 | 7.34 | 7.30 |
| 8.03 ADITYA BIRLA HFL 11SEP29 | 2024-09-11 | 125 | 8.02 | 8.02 |
| 9.90 ADANIENTLTD 12SEP29 | 2024-09-12 | 105 | 10.00 | 9.85 |
| 0% CYQURE INDIA PRIVATE LIMITED 17MAR2028 | 2024-09-17 | 103 | 14.28 | 14.50 |
| 8.10 ABFL 07SEP29 | 2024-09-09 | 85 | 8.11 | 8.10 |
Source: Harmoney data analytics
Events This Week
September 24, Tuesday:
- US Monthly house price index for July.
- US Consumer confidence index for September.
September 25, Wednesday:
- US New residential sales for August.
September 26, Thursday:
- US 3rd estimate GDP for Q2.
- US Revised corporate profits for Q2.
- US Advance report on durable goods for August.
- US Unemployment insurance weekly claims report for Sep 21 week.
- US Weekly export sales.
September 27, Friday:
- US Advance economic indicators report for August.
- US State quarterly personal income for Q2.
- US GDP by state for Q2.
- India Balance Payment for Q2.
- India Current Account Balance for Q2.
- India FX Reserves for Sep 16 week.
- India Trade Deficit for Q2.
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