For the seventh week in a row, the Forex reserves set a record high, bringing them closer to $700 billion. India's foreign exchange reserves increased by $2.8 billion to a new all-time high of $692 billion for the week ending September 20, according to the Reserve Bank of India data released on Friday. The previous high of $689 billion was set in the week ending September 13. Foreign currency assets increased by $2.05 billion during the week, contributing to an increase in overall reserves. Gold reserves surged by $726 million this week, while Special Drawing Rights increased by $121 million, according to RBI data.
Top 3 Leads Today
- BSE, NSE roll out revised transaction fees starting October 1.
- India Ratings: Rising issuance of CPs, CDs likely to keep money market rates elevated.
- Centre lifts ban on export of non-basmati white rice, traders hail move.
Indian Markets
- Money Markets Minute: Last week, the call money rate ranged between the Reserve Bank of India's repo rate of 6.50% and the standing deposit facility rate of 6.25%. On Friday, the three-day call rate ended at 6.50% as banks’ demand for funds climbed amid liquidity constraints.
- Government Bond Brief: The 10-year benchmark yield remained relatively stable week-on-week. The benchmark yield climbed 4 basis points to 6.7609% on Friday, as demand at the weekly government bond auction was weak and the government did not cut its current financial year 2024-25 gross borrowing as was expected by traders.
- Corporate Bond Beat: Yields fell 3 to 4 basis points across the yield curve last week as the government of India's borrowing calendar failed to match traders' expectations of a reduction in gross borrowing for the current fiscal year. Volumes increased last week following some buying by mutual funds at the close of the quarter in the secondary market.
- Forex Flash: The rupee fell last week against the dollar after failing to remain above its major resistance level of 83.50. Traders cited robust dollar demand from domestic importers, the paring of speculative longs, and the Reserve Bank of India's expected absorption of dollar inflows as factors limiting the currency's advances. The rupee closed at 83.70 against the US dollar, up from its previous closing of 83.6425. The currency fell 0.1% for the week.
- Stocks Spotlight: Indian shares fell slightly on Friday as investors booked profits after a week in which the blue-chip indices hit record highs every day. The benchmark Nifty 50 closed down 0.07% at 26,197.75 points, while the Sensex fell 0.3% to 85,571.85. The indices rose 1.5% and 1.2% for their third week of advances.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE134E08ND3 | 7.27 PFC 15OCT31 | 1731 | 7.27 |
| INE115A07QX3 | 7.65 LIC HOUSING 19AUG31 | 1600 | 7.64 |
| INE261F08DK7 | 5.70 NABARD 31JUL25 | 1575 | 7.77 |
| INE261F08EK5 | 7.44 NABARD 24FEB28 | 1420 | 7.46 |
| INE134E08NE1 | 7.22 PFC 15OCT39 | 1255 | 7.19 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE0Z4807015 | 0% CYQURE INDIA PRIVATE LIMITED 17MAR2028 | 167 | 14.13 |
| INE321N07442 | 9.50 INCRED 18SEP26 | 49 | 9.78 |
| INE996U07230 | 10.40 SICREVACAP 23AUG26 | 48 | 13.67 |
| INE07HK07692 | 9.85 KRAZYBEESERVICES 16MAY25 | 30 | 12.83 |
| INE915D07P73 | 0% CITICORP 23DEC26 | 27 | 8.00 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 15278 |
| 3Y | 9944 |
| 5Y | 4990 |
| 7Y | 4396 |
| 10Y | 6547 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: The one-day call rate may open firm on Monday as banks' demand for funds may rise to meet their reserve requirements. On Monday, there will be a total net outflow of ₹217.45 billion and the call rate may move in the 6.20-6.70% band. The call rate is likely to ease later during the week.
- Government Bonds: Yields are likely to be steady on Monday as the indicative calendar of states borrowing for Oct-Dec announced of ₹3.2 trillion was a little higher than expected. The traders will track foreign fund inflows and crude oil prices this week for more cues. The 10-year benchmark is likely to trade in the 6.73-6.79% range.
- Corporate Bonds: Yields may remain steady, and volumes are expected to be tepid in the secondary market this week on lack for fresh triggers. Investors will track the domestic government bond yields and the foreign inflows for further cues.
- Forex: This week, the rupee will react to the US personal consumption expenditure data release on Friday and take more cues from the movement in the dollar index against the major basket of currencies. On Monday, the rupee may trade in 83.65-83.80 range and expect the RBI to intervene if the rupee rises above 83.50 per dollar.
- Stocks: The benchmark indices may open firm on Monday. Market participants will focus on India’s Q2 current account data to be released on Monday. They will also take more cues from US Federal Reserve Chair Powell’s speech later in the day. This week, domestic equities will be driven by macroeconomic data, rupee-dollar exchange rate fluctuations, foreign funds inflows in India, and crude oil prices.
Events This Week
September 30, Monday:
- US Fiscal year ends.
- India Government budget value for August.
- India Infrastructure output for August.
- India Current account Q2.
- India External debt Q2.
October 1, Tuesday:
- US Construction spending for August.
- US Global manufacturing PMI for September.
- India Manufacturing PMI for September.
October 2, Wednesday:
- US Metropolitan area employment and unemployment for August.
- M3 Money supply for Sep 20 week.
October 3, Thursday:
- US Unemployment insurance weekly claims report for Sep 28 week.
- US Weekly Export sales.
- US Services PMI for September.
- US Manufacturers' Shipments, Inventories & Orders for August.
- US Global Services PMI for September.
October 4, Friday:
- US Employment report for September.
- India Composite PMI for September.
- India Bank loan growth for Sep 20 week.
- India Deposit growth for Sep 20 week.
- India FX reserves for Sep 27 week.
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