India's foreign exchange reserves fell $17.76 billion, the largest weekly loss, to a four-month low of $657.8 billion for the week ended November 15, according to the Reserve Bank of India's most recent figures released on Friday. The drop was ascribed to the strengthening of the US dollar and the central bank's dollar sales to control volatility in the foreign exchange markets. The forex exchange reserves experienced their most significant weekly decline in the week ending October 24, 2008, during the global financial crisis, with a total of $15.5 billion. Forex reserves declined for the seventh consecutive week after reaching a record high of $705 billion on September 27.
Top 3 Leads Today
- Indian central bank asks lenders to cut speculative bets against rupee, sources say.
- Gold rallies on safe-haven demand, set for best week in nearly 2 years.
- India markets regulator proposes more diversified ownership of equity clearing corporations.
Indian Markets
- Money Markets Minute: The interbank call money rate fell below the RBI's standing deposit facility rate of 6.25% on Friday as demand for cash eased near the end of the day. The three-day call money rate closed at 6.00%, remaining unchanged from Thursday's close. The weighted average call money rate was 6.73%, up from 6.62% on Thursday, near the RBI's marginal standing facility rate of 6.75%.
- Government Bond Brief: Yields finished marginally up on a weekly basis as traders covered their short positions, minimising risk ahead of the weekend. The weekly gilt auction results showed a lack of demand for new bond issuance, causing yields to rise. The most traded 7.10% 2034 bond yielded 6.87% on Friday, compared to 6.86% on Thursday. Since the RBI again raised inflation fears on Wednesday, bond yields have climbed, and foreign investors have pulled out over ₹100 billion from domestic bonds in November.
- Corporate Bond Beat: Yields jumped 3-4 basis points across tenures last week, reflecting domestic government bond yields and concerns about inflation. Investors concentrated on primary issuances, resulting in low volumes. Some mutual funds were seen selling three-year bonds.
- Forex Flash: The Indian rupee fell to its lowest level on record on Friday before recovering as the central bank intervened to stabilise the currency despite the US dollar rising to a two-year high. The rupee fell to 84.5075 versus the US dollar before finishing at 84.4450, up 0.06% for the day. The currency was a little lower week on week. The rupee held its ground thanks to the RBI's dollar-selling operations and its orders to select banks to limit speculative wagers against it.
- Stocks Spotlight: Indian shares snapped a two-week losing skid on Friday as Adani Group stock credit risks eased, lifting heavyweight financials to their strongest session since early June. The NSE Nifty 50 climbed 2.39% to 23,907.25, while the BSE Sensex increased 2.54% to 79,117.11. Following two weeks of losses, Friday's surge propelled the Nifty and Sensex to weekly gains of 1.6% and 2.0%, respectively. Eleven of the 13 major sectors increased last week, with real estate up 6.26%.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE535H07BP5 | 7.95 SMFG 30JUN25 | 1070 | 9.93 |
| INE053F08411 | 7.37 IRFC 31JUL29 | 525 | 7.26 |
| INE556F08JU6 | 5.59 SIDBI 21FEB25 | 500 | 7.27 |
| INE557F08GA2 | 7.14 NHB 17NOV34 | 475 | 7.14 |
| INE261F08EI9 | 7.70 NABARD 30SEP27 | 435 | 7.51 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE0FUJ07072 | 0% AGILEMED INVESTMENTS PRIVATE LIMITED 10JAN2027 | 30 | 12.1 |
| INE06E507306 | 10.97 HELLA INFRA 29APR26 | 24 | 17.21 |
| INE296Q07068 | 12.00 MONEYBOXX FINANCE LIMITED 11NOV2026 | 18 | 12.27 |
| INE756I08256 | 8.40 HDB FINANCE 22DEC33 | 17 | 8.29 |
| INE891K08208 | 8.35 AXIS FINANCE 23JUN34 | 17 | 8.21 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 6484 |
| 3Y | 3139 |
| 5Y | 1325 |
| 7Y | 554 |
| 10Y | 1907 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: On Monday, the one-day interbank call money rate may open around the RBI's repo rate of 6.50% due to early trading hours demand for funds from banks to meet reserve requirements. During the day, the call rate may fluctuate between 6.00-6.60%. On Friday, the three-day call rate closed at 6.00%.
- Government Bonds: On Monday, domestic bonds will track US treasury movements and keep a close watch on Russia-Ukraine crisis. The July-September GDP print this week will be the next domestic trigger for assessing India's speed and magnitude of interest rate cut by the RBI. The yield on the 10-year benchmark 7.10%, 2034 bond is expected at 6.83-6.90% on Monday.
- Corporate Bonds: Yields are likely to open firm on Monday and will track movements of government bond yields and US treasuries. Trade volumes are expected to be tepid as investors will eye primary issuances and wait for more clues from the GDP data to be published this week.
- Forex: The rupee will likely remain under pressure due to concerns over foreign fund outflows from domestic equities and bond markets. Strong US economic data will also help the dollar strengthen further. S&P Global's indicator of the US manufacturing sector rose to 55.3 last month, the highest level since April 2022. The rupee is expected to trade between 84.40 and 84.55 per dollar on Monday.
- Stocks: On Monday, the benchmark indices may rise after Maharashtra Assembly election results favoured the BJP-led Maha Yuti alliance. Since it has the second-most Centre seats, Maharashtra is important politically. After a selloff last week, large-cap stocks will be in focus this week. Investors will keenly watch foreign institutional investors fund flows for more cues.
Events This Week
November 26, Tuesday:
- US Monthly House Price Index for September.
- US Quarterly House Price Index.
- US Consumer Confidence Index for November.
- US New Residential Sales for October.
- US Federal Open Market Committee meeting minutes published.
November 27, Wednesday:
- US 2nd estimate GDP for Q3.
- US Advance Report on Durable Goods for October.
- US Unemployment Insurance Weekly Claims Report for Nov 23 week.
- US Metropolitan Area Employment and Unemployment for October.
- US Pending Home Sales Index for October.
- India M3 Money Supply for Nov 11 week.
November 28, Thursday:
- US Thanksgiving Day. Financial markets closed.
November 29, Friday:
- US Weekly export sales.
- US Financial markets close early after Thanksgiving.
- India Federal Fiscal Deficit for October.
- India Bank Loan Growth for Nov 11 week.
- India FX Reserves Nov 18 week.
- India Gross Domestic Product Quarterly for Q3.
- India Infrastructure Output for October.
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