India Ratings and Research stated Wednesday that cutting spending will reduce the fiscal deficit to 4.75% for FY25, 0.19% below the budget goal. The rating agency said revenue spending, excluding subsidies, will be 0.12% of GDP, below budget estimate. According to its chief economist and head of public finance Devendra Kumar Pant, government capital expenditure will be ₹620 billion lower than estimated at ₹11.11 trillion. Pant stressed that government capex will be 10.6% more than last year. The administration previously predicted 17.6% rise in the key number.
Top 3 Leads Today
- Regulators must ensure financial stability as NBFC space gets complex, says RBI Rao.
- Morgan Stanley says 10% rise in US tariffs on India may hit growth by 30 bps.
- PSBs get green flag to raise ₹252 billion through equity dilution in FY25.
Indian Markets
- Money Markets Minute: The call rate closed at the RBI's marginal standing facility rate of 6.75%, up from 6.65% on Tuesday, reflecting strong demand for funds from banks amid a liquidity deficit. The weighted average call money rate also exceeded the RBI's repo rate, settling at 6.71% compared with 6.69% in the previous session.
- Government Bond Brief: Yields fell, tracking an intraday drop in the US Treasury yields, with receiving fixed rates in overnight indexed swaps further supporting bond price gains. The 10-year benchmark 6.79%, 2034 bond closed at a yield of 6.81%, down from 6.83% on Tuesday. Market turnover rose to ₹307.60 billion, compared with ₹299.30 billion in the previous session.
- Corporate Bond Beat: Corporate bond yields in the secondary market rose by 2-3 basis points, driven by selling pressure from mutual funds facing month-end redemption demands. This led to increased offloading of corporate bond holdings. Trading volumes totalled ₹88.14 billion on the exchanges, down from ₹112.43 billion recorded on Tuesday.
- Forex Flash: The rupee weakened against the dollar, pressured by dollar purchases from banks on behalf of importers and foreign portfolio investors. It depreciated by 0.2% to close at 84.4525 per dollar, compared to the previous close of 84.3275.
- Stocks Spotlight: After a volatile trading session, indices ended with modest gains, moving within a narrow range as anticipated due to a lack of significant domestic or global market triggers. Notably, Adani Group stocks saw a strong surge. The Sensex rose 0.29% to close at 80,234.08, while the Nifty climbed 0.34% to settle at 24,276.7.
International Markets
- US Stocks: Technology stocks fell on Thanksgiving eve as investors worried the Federal Reserve may be hesitant about rate reduction after strong US inflation data. The Nasdaq led the falls. October consumer expenditure data revealed the US. economy maintained its strong expansion, although inflation reduction appeared to have paused. The S&P 500 fell 0.38% to 5,998.78 points, while the Nasdaq fell 0.59% to 19,061.78. The Dow declined 0.31% to 44,723.23.
- Treasuries: Yields eased on Wednesday as investors evaluated the latest economic data and the possible impact of the incoming US administration's policies, particularly tariffs. Core inflation, which the Federal Reserve measures for monetary policy, climbed 2.8% in the year to October, up from 2.7% in September. The 10-year note rate sank 5.4 basis points to 4.248% from 4.302% Tuesday, while the 30-year bond yield fell 5 basis points to 4.4298%. The two-year note yield declined 3.1 basis points to 4.223%, from 4.254% late Tuesday.
- Currency: On Wednesday, the dollar sank broadly in light pre-holiday activity as investors assessed the possibility that President-elect Donald Trump could start a tariff war no one will win. Before a long Thanksgiving weekend and month-end, few traders wanted to create or hold positions. Markets are closed on Thursday, and exchange closes early on Friday. The dollar index declined 0.73% to 106.06 against a basket of currencies. Dollar fell 1.3% to 151.11 against the yen reaching its highest level in five weeks.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 804 | 1813 | 454 | 747 | 6 |
| Financial Institution | 185 | 728 | 371 | 125 | - |
| Housing Finance Company | 10 | 673 | 42 | 81 | - |
| Telecom - Cellular & Fixed line services | 30 | 165 | 160 | 121 | - |
| Public Sector Bank | - | - | - | 25 | 184 |
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 | 1325 | 7.22 | 7.23 |
| 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 PROJECTS PRIVATE LIMITED 13NOV2027 | 2024-11-13 | 200 | 15.93 | 15.94 |
| 10.20 CLIX CAPITAL 18MAR27 | 2024-11-19 | 111 | 10.64 | 10.98 |
| 10.00 MUTHOOT CAPITAL 20NOV26 | 2024-11-21 | 88 | 10.68 | 11.09 |
| 9.50 HERO FINCORP PERP 25MAY35 C | 2024-11-25 | 75 | 9.36 | 0.00 |
| 9.90 IKF FINANCE LIMITED 15MAR2027 | 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 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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