Indian banks have a lower credit-deposit ratio than several global banks, according to Ashima Goyal, a Reserve Bank of India Monetary Policy Committee member and Indira Gandhi Institute of Development Research professor. She stated that bank credit growth is safe in the context of nominal growth. On Thursday, Goyal said at the Global Fintech Fest that tailored prudential policies can reduce increasing non-performing assets in personal credit. The need to raise interest rates across the board can be avoided by addressing risk weights in sectors where too much optimism is seen. This will let other sectors continue to grow, she added.
Top 3 Leads Today
- Moody's ups India 2024 GDP growth forecast to 7.2%, cuts CPI view.
- Retail inflation rates for farm, rural workers ease to 6.17%, 6.2% in July.
- SEBI asks custodians to settle FPI trades by T+1, remit fund on time.
Indian Markets
- Money Markets Minute: The call money rate closed near the RBI's marginal standing facility rate of 6.75% due to strong demand for funds from banks despite surplus liquidity. The rate ended at 6.70%, up from 6.25% on Wednesday. The weighted average call rate rose to 6.66% from 6.56% the previous day.
- Government Bond Brief: Government bond yields remained steady, with subdued trading volumes due to a lack of significant market cues. Traders were cautious ahead of the upcoming US GDP data for April-June and the weekly unemployment claims, both set to be released after Indian market hours. The 10-year benchmark 7.10%, 2034 bond closed with a yield of 6.86%, unchanged from the previous day. Turnover fell to ₹213.55 billion from ₹342.10 billion on Wednesday.
- Corporate Bond Beat: Corporate bond yields in the secondary market remained stable as there were no new domestic or global triggers. Mutual funds were active on both the buying and selling sides, while some banks engaged in selling. The exchanges recorded deals totalling ₹125.92 billion, up from ₹98.80 billion on Tuesday.
- Forex Flash: The rupee closed at its highest level in over a week against the dollar, supported by persistent dollar sales from banks due to foreign fund inflows related to changes in the MSCI Global Standard Indices. It settled at 83.87, marking a 10 paise rise from its previous close. On Wednesday, the rupee had finished at 83.97.
- Stocks Spotlight: The indices built on the previous session's momentum, closing at new record highs, driven by heavyweights like Reliance Industries following the company's announcement that it would consider a bonus share issue on Sept 5. By the close, the Sensex had risen 0.43% to 82,134.61, while the Nifty had gained 0.40% to finish at 25,152.
International Markets
- US Stocks: The Dow Jones Index closed at a new high on Thursday in mixed trade, boosted by strong US economic data. Artificial intelligence chipmaker Nvidia fell after its mainly in-line estimate disappointed investors. The Dow Jones increased 0.59%, the S&P 500 remained unchanged, and the Nasdaq Composite fell 0.23%.
- Treasuries: The benchmark 10-year note yields rose 2.4 basis points to 3.865% as investors completely priced in a 25-basis-point Fed rate cut in September after the release of US economic data on Thursday. The Bureau of Economic Analysis's second estimate indicated that Q2 GDP climbed 3.0% annually, and jobless claims fell from 2,000 to 231,000 seasonally adjusted for the week ending on August 24.
- Currency: On Thursday, the dollar gained for the second consecutive session following the release of GDP data that indicated the US economy expanded slightly more rapidly than anticipated in the second quarter. The dollar reached a one-week high against the yen at 145.55. The euro experienced a 0.4% decline to $1.1077, resulting in a gain for the dollar.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 337 | 2004 | 281 | 372 | 312 |
| Financial Institution | 535 | 875 | 1015 | 660 | 100 |
| Public Sector Bank | - | - | - | 531 | - |
| Housing Finance Company | 60 | 2 | 105 | 744 | - |
| Private Sector Bank | 210 | - | - | 255 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.75 LICHSGFIN 23AUG29 | 2024-08-23 | 1020 | 7.74 | 7.74 |
| 7.81 TATA CHEMICALS LIMITED 20AUG2027 | 2024-08-20 | 950 | 7.81 | 7.81 |
| 9.50 CHOLAINVFIN PERP 22AUG34 C | 2024-08-22 | 886 | 9.62 | |
| 7.95 ICICI HFL 16NOV27 | 2024-08-16 | 180 | 7.97 | 7.97 |
| 8.70 ADANI ENERGY SOLUTIONS LIMITED 28AUG2034 | 2024-08-27 | 120 | 8.51 | 8.51 |
| 7.30 BOB 27AUG34 | 2024-08-27 | 75 | 7.30 | 7.30 |
| 10.25 SCNL 21AUG26 | 2024-08-22 | 60 | 11.78 | 11.48 |
| 9.50 AFL 23AUG34 | 2024-08-27 | 55 | 9.21 | 9.21 |
Source: Harmoney data analytics
Events This Week
August 30, Friday:
- US Personal income and outlays for July.
- US Agricultural prices for July.
- India Federal fiscal deficit for July.
- India FX reserves Aug 19 week.
- India GDP quarterly for Q2.
- India Infrastructure output for July.
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