India could get a better sovereign rating in the next 24 months if the central government can handle its money well and cut the budget deficit to 4% of GDP, a representative from S&P Global Ratings said on Wednesday. YeeFarn Phua, S&P Global Ratings Director, Sovereign Ratings, stated the upgrade trigger would be general government including central and state governments deficit dropping below 7% of GDP, pushed by the central government. With the fiscal consolidation roadmap, the deficit will be cut to 4.5% by 2025–26. In May, the S&P rating agency upgraded India's outlook from stable to positive while maintaining its ‘BBB-’ rating.
Top 3 Leads Today
- India's rating upgrade possible in next 24 months if fiscal deficit falls to 4%: S&P.
- India's Services PMI Holds Strong At 60.5 In June.
- RBI Das meets bank heads, stresses on better governance, compliance.
Indian Markets
- Money Markets Minute: The call money rate ended below the RBI's repo rate of 6.50% as banking system liquidity approached a surplus of ₹1 trillion. The one-day call money rate closed at 6.35%, down from 6.45% on Tuesday.
- Government Bond Brief: Government bond yields fell, influenced by a slight drop in US treasury yields. Additionally, some traders were optimistic that upcoming US labour data would indicate further weakening in the labour market, strengthening the case for a US rate cut in September. The 10-year benchmark 7.10%, 2034 bond yield ended at 7.0%, down from 7.01%.
- Corporate Bond Beat: Activity in the corporate bonds secondary market
remained subdued as investors avoided making significant moves due to a
lack of major domestic catalysts. Yields on corporate bonds largely mirrored
the trends in the government bond market. - Forex Flash: The rupee was stable against the dollar as banks sold dollars on behalf of exporters, countering the effect of dollar purchases by importers. It traded within a narrow range of 9 paise before closing at 83.5300 per dollar, slightly up from Tuesday's closing of 83.5050 per dollar.
- Stocks Spotlight: Boosted by gains in bank stocks, particularly HDFC Bank, benchmark indices soared to new record highs. The Sensex surpassed the 80,000-point mark intraday, reaching 80,074.30 points, while the Nifty 50 climbed to an all-time high of 24,309.15 points. Positive global market sentiment was reinforced by US Federal Reserve Chair Jerome Powell's remarks on significant progress in reducing inflation, further propelling the indices.
International Markets
- US Stocks: The benchmark indices were mixed on Wednesday with S&P 500 and Nasdaq up 0.5%, and 0.88% respectively, while the Dow was marginally down by 0.06%. Both S&P and Nasdaq rose to record high after the ADP Employment report and weekly jobless claims data indicated softening labour market conditions. Markets anticipate labour market weakness will prompt Fed rate cuts.
- Treasuries: Treasury yields declined for a second consecutive session on
Wednesday, following the release of the Institute for Supply Management's
index of services businesses. The index recorded its lowest reading since
May 2020, during the peak of the pandemic. The bond market will remain
closed on Thursday for Independence Day. - Currency: The US dollar declined against a basket of currencies as services
sector activity plummeted to a four-year low. In June, orders plummeted,
suggesting the economy may lose pace in the second quarter. For June, the
Institute for Supply Management's nonmanufacturing purchasing managers
index fell to 48.8, the lowest since May 2020, from 53.8.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sector | 0-1y | 1-3y | 3-5y | 5-10y |
|---|---|---|---|---|
| NBFC | 685 | 1047 | 843 | 455 |
| Financial Institution | 150 | 1490 | 376 | 370 |
| Private Sector Bank | 150 | 690 | - | 545 |
| Housing Finance Company | 145 | 206 | 360 | 408 |
| Power - Transmission | - | 310 | - | 174 |
| Investment Company | 2 | 163 | 131 | 139 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Traded Volume(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 11.00 GMR INFRA 26JUN27 C | 2024-06-26 | 600.00 | 15.67 | 15.71 |
| 7.44 IREDALTD 25AUG34 | 2024-06-25 | 75.00 | 7.44 | 7.44 |
| 8.35 AXISFIN 23JUN34 | 2024-06-24 | 180.00 | 8.36 | 8.35 |
| 8.07 NIIF 23AUG29 | 2024-06-21 | 430.00 | 8.07 | 8.07 |
| 10.25 AYEFINANCE 20MAR26 | 2024-06-20 | 205.04 | 11.43 | 10.63 |
| 9.10 SHRIRAMFIN 20JUN34 | 2024-06-20 | 129.00 | 9.09 | 9.09 |
| 9.25 SKFL - C 19SEP27 M | 2024-06-19 | 100.00 | 9.75 | 9.75 |
| 10.20 KRAZYBEESERVICES 19DEC25 | 2024-06-19 | 87.60 | 11.24 | 12.60 |
| 8.05 TATA CAPITAL HFL 18JUN29 | 2024-06-18 | 285.00 | 8.05 | 8.04 |
| 7.9265 LICHSGFIN 14JUL27 | 2024-06-14 | 1060.00 | 7.93 | 7.93 |
| 7.44 IRFC 13JUN34 | 2024-06-13 | 1530.00 | 7.45 | 7.40 |
| 8.55 HDB PERP - C | 2024-06-13 | 259.00 | 8.54 | 8.54 |
| 11.40 KEERTANA 13JUN27 | 2024-06-13 | 62.05 | 13.00 | 13.53 |
| 9.95 ADANIAIRPORT 12JUN28 | 2024-06-12 | 96.51 | 9.93 | 9.78 |
| 9.16 360ONEPRIME 12JUN27 | 2024-06-12 | 75.00 | 9.67 | 9.90 |
Source: Harmoney data analytics
Events This Week
July 4, Thursday:
- US Independence Day. Financial markets closed
July 5, Friday:
- US Employment Report for June.
- US Weekly Export Sales.
For any inquiries or assistance related to market data, please reach out to us at support@harmoney.in