With a probable trade war in Donald Trump's second term as President of the United States, the Reserve Bank of India is confident in its ability to absorb the fallout from global shocks caused by such policies. In an interview with the Financial Times, RBI Governor Shaktikanta Das described "protectionism" and "tariffs" as the most serious issues, and said India was well-positioned to deal with any spillover from external sources. Foreign investors have been exiting debt and equities markets since Trump won the presidential election earlier this month. This has put pressure on the rupee, which dropped to a fresh low of 84.50 per dollar last week.
Top 3 Leads Today
- SEBI introduces mark-to-market basis valuation for repo transactions by MFs.
- Govt plans insurance law changes for unified licence, hiking FDI limit.
- Indians see wallets drain by ₹4.85 billion in 'UPI scams' in FY25.
Indian Markets
- Money Markets Minute: The call rate closed above the RBIs repo rate of 6.50%, driven by strong demand for funds from banks amid a liquidity deficit. The call money rate ended at 6.65%, up from 6.24% on Monday. The weighted average call money rate also remained above the RBI's repo rate, closing at 6.69%, slightly lower than 6.72% recorded on Monday.
- Government Bond Brief: Yields edged higher as traders booked profits by selling bonds. However, the fall in prices was capped as state-owned banks stepped in to buy the 6.79% 2034 bond at attractive yield levels. The yield on the 10-year 6.79%, 2034 bond rose to 6.83% from 6.82% on Monday. Market turnover stood at ₹299.30 billion, down from ₹327.45 billion in the previous session.
- Corporate Bond Beat: Corporate bond yields in the secondary market held steady across all maturities as investors concentrated on fulfilling basic portfolio needs. Trading activity picked up, with volumes rising to ₹112.43 billion on the exchanges, compared with ₹67.32 billion on Monday.
- Forex Flash: The rupee closed marginally lower as banks bought the greenback to facilitate foreign portfolio investor outflows from the Indian stock market. After touching 84.2200 per dollar, its highest level since Nov 6, the rupee settled at 84.3275 per dollar, compared with 84.2875 on Monday. During the session, the rupee traded within a range of 13 paise.
- Stocks Spotlight: The indices ended slightly down after a two-day rally, navigating a volatile trading session. The Nifty closed just below 24,200. Despite mixed global cues, markets opened higher with the Nifty crossing 24,300, but early gains were wiped out within the first hour, pushing the indices into the red for most of the day. However, buying momentum in the final hour helped the indices recover from their intraday lows. At the close, the Sensex slipped 0.13% to 80,004.06, while the Nifty fell 0.11% to 24,194.50.
International Markets
- US Stocks: Wall Street shares, led by the S&P 500 and the Nasdaq, finished higher on Tuesday, as technology companies recovered while investors analysed President-elect Donald Trump's tariff vows on key trade partners and the Federal Reserve's latest minutes. The Dow Jones Industrial Average climbed 0.28% to 44,860.31, the S&P 500 0.57% to 6,021.63, and the Nasdaq Composite 0.63% to 19,174.30.
- Treasuries: Yields rose on Tuesday after Monday's rapid bond rally lost pace and the tariff announcement dampened investor euphoria over Trump's late-week Treasury secretary pick, Scott Bessent. Concerns over tariffs and the US deficit knocked on the market's confidence in the Fed's capacity to cut rates significantly. The 10-year note yield jumped 3 basis points to 4.293% from 4.263% late Monday, while the 30-year bond yield rose 1.8 basis points to 4.4647%.
- Currency: The US dollar climbed against certain currencies on Tuesday after US President-elect Donald Trump promised to put fresh taxes on imports from Canada, Mexico, and China. Trump stated that he would impose a 25% tax on Mexican and Canadian imports, as well as an additional 10% duty on Chinese goods, citing worries about illegal immigration and drug trading. The Mexican peso fell 1.6% against the dollar to 20.66, while the Canadian currency fell 0.56% to 1.41 per US dollar. The dollar index against six currencies rose to 107.15 from 106.86 late Monday.
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 | 710 | 2220 | 1787 | 291 | 1 |
| NBFC | 870 | 1049 | 283 | 46 | 245 |
| Housing Finance Company | 50 | 296 | 17 | 362 | 1 |
| Private Sector Bank | 374 | 5 | 5 | 311 | - |
| Holding Company | 450 | - | - | - | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.23 SBI 19NOV39 | 2024-11-19 | 1270 | 7.22 | 7.20 |
| 7.70 FEDERAL BANK 11NOV34 | 2024-11-11 | 480 | 7.76 | 7.76 |
| 7.15 IRFC 14NOV39 | 2024-11-13 | 440 | 7.15 | 7.16 |
| 8.25 GIC HOUSING 19JUN26 | 2024-11-21 | 200 | 8.33 | 8.34 |
| 11.00 GMR INFRA 13NOV27 | 2024-11-13 | 200 | 15.93 | 15.94 |
| 10.20 CLIX CAPITAL 18MAR27 | 2024-11-19 | 111 | 10.64 | 10.98 |
| 9.45 OXYZO FINSERV 11NOV26 | 2024-11-11 | 90 | 9.90 | 10.50 |
| 9.90 IKF FINANCE 15MAR27 | 2024-11-13 | 60 | 11.00 | 11.00 |
| 7.70 SUNDARAM HOME FINANCE 21DEC29 | 2024-11-21 | 50 | 7.70 | 7.70 |
Source: Harmoney data analytics
Events This Week
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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