US GDP increased at a 2.8% annualized rate in the April-June period after rising 1.4% in the previous quarter. Personal spending also advanced 2.3%, which is also more than projected. The data sets may reduce brewing expectations of a larger-than-expected rate cut in September or a sudden Federal Reserve easing at next week's meeting.
Top 3 Leads Today
- Early work on curbing climate risk to aid long-term growth - RBI Rao.
- Funding winter for startups may end with angel tax abolition: DPIIT secy
- First draft of revised direct tax code in 6 months: Revenue secretary.
Indian Markets
- Money Markets Minute: The call money market rate significantly dropped below the RBI's standing deposit facility rate of 6.25% as the demand for funds lessened towards the end. The one-day call money rate fell to 5.75%, down from 6.67% on Wednesday. Similarly, the weighted average call rate decreased to 6.56% from 6.67% on Wednesday.
- Government Bond Brief: Government bond yields declined, influenced by a drop in overnight indexed swap rates. Additionally, a decrease in the yield on the 2-year US Treasury note supported short-term gilt prices. The 10-year benchmark 7.10%, 2034 bond closed with a yield of 6.95%, down from 6.96% on Wednesday. The turnover was ₹761.65 billion, higher than the ₹635.85 billion recorded on Wednesday.
- Corporate Bond Beat: Yields on corporate bonds dropped by 2 to 3 bps across various tenures in the secondary market as mutual funds actively purchased papers to invest recent inflows. Corporate bond yields also reflected the decline in government bond yields, which eased in response to movements in the overnight indexed swap market.
- Forex Flash: The rupee closed steady against the dollar due to the RBI's intervention, with its dollar sales offsetting the dollar purchases by importers. After fluctuating within a range of 7 paise, the rupee ended at 83.6975 per dollar, slightly improving from 83.7175 per dollar on Wednesday.
- Stocks Spotlight: The benchmark indices experienced another volatile session as investors continued to take profits following the presentation of the 2024-25 Budget on Tuesday. However, strong inflows helped mitigate most of the declines. The Nifty 50 ended lower for the fifth consecutive session, with volatility driven by earnings reports from major companies and the monthly expiry of derivatives. At the close, the Sensex was down 0.14% at 80,039.80, and the Nifty was down 0.03% at 24,406.10.
International Markets
- US Stocks: The S&P 500 and Nasdaq Composite closed lower on Thursday after a volatile session, unable to recover from the previous day's tech-driven decline as investors deliberated the future of major tech stocks. Conversely, the Dow Jones Industrial Average managed to finish higher, buoyed by unexpectedly strong U.S. GDP data. Small-cap stocks also saw gains as investors turned to value stocks, with the Russell 2000 rising 1.3% to recover some of the losses from Wednesday.
- Treasuries: The US 10-year yield slipped four basis points to 4.24%. Gains for US government debt came as traders weighed signs of a resilient US economy against calls for quicker rate cuts from the Federal Reserve. The market continues to expect the first rate cut in September.
- Currency: The dollar index was flat at 104.36. The dollar pared its losses against the yen and euro after data revealed the U.S. economy grew faster than anticipated and inflation eased in the second quarter. This development tempered expectations for a larger-than-expected rate cut in September or an unexpected easing by the Federal Reserve at next week's meeting.
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 | - | 2272 | 1504 | 25 | - |
| NBFC | 452 | 953 | 1584 | 90 | 221 |
| Private Sector Bank | 200 | 310 | - | 298 | - |
| Power - Transmission | - | 50 | - | 700 | - |
| Investment Company | 1 | 390 | - | 271 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.39 IRFC 15JUL34 | 2024-07-15 | 1315.00 | 7.40 | 7.39 |
| 7.36 SBI 11JUL39 | 2024-07-11 | 939.90 | 7.35 | 7.33 |
| 7.54 BOI 19JUL34 | 2024-07-19 | 890.00 | 7.55 | 7.55 |
| 7.89 BAJAJ HFL 14JUL34 | 2024-07-15 | 760.00 | 7.88 | 7.87 |
| 7.40 CANARA BANK 19JUL34 | 2024-07-19 | 525.00 | 7.39 | 7.40 |
| 7.8650 LICHSGFIN 20AUG26 | 2024-07-12 | 460.00 | 7.86 | 7.86 |
| 8.71 HDB PERP 12JUL34 C | 2024-07-15 | 401.00 | 8.65 | 8.51 |
| 8.1701 ADITYA BIRLA HFL 25AUG27 | 2024-07-12 | 345.00 | 8.18 | 8.18 |
| 8.10 BAJAJ FINANCE 10JUL26 | 2024-07-10 | 315.00 | 8.09 | 8.07 |
| 8.1168 ADITYA BIRLA HFL 15MAY29 | 2024-07-12 | 275.00 | 8.12 | 8.12 |
| 8.01 TATACAPITAL 21JUL34 | 2024-07-23 | 248.00 | 8.01 | 8.00 |
| 7.36 IOCL 16JUL29 | 2024-07-16 | 235.10 | 7.34 | 7.35 |
| 8.00 TATAIND 21JUL25 C 17JUL26 M | 2024-07-19 | 225.00 | 7.97 | 7.94 |
| 8.08 KMPL 21OCT27 | 2024-07-15 | 165.00 | 8.10 | 8.10 |
| 8.20 TFSIN 16JUL29 | 2024-07-16 | 120.00 | 8.19 | 8.19 |
| 9.00 CHOLAINVFIN 09APR31 | 2024-07-15 | 110.00 | 9.00 | 9.00 |
| 9.50 HINDUJA 10JUL39 | 2024-07-10 | 100.00 | 9.45 | 9.40 |
Source: Harmoney data analytics
Events This Week
July 26, Friday:
- US Personal income and outlays for June.
- India Bank loan growth Jul 12 week.
- India Deposit growth Jul 12 week.
- India Foreign exchange reserves Jul 19 week.
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