India remains the world's fastest expanding economy, driven by investment and private consumption, according to the International Monetary Fund's Regional Economic Outlook for Asia-Pacific, released on Friday. The IMF’s World Economic Outlook report maintained India's GDP growth predictions of 7% and 6.5% for FY25 and FY26, respectively. The IMF said that pent-up demand from the Covid-19 outbreak has been exhausted as the economy "reconnects" with its potential growth.
Top 3 Leads Today
- Forex reserves drop by $3.463 billion to $684.805 billion, shows RBI data.
- Six industries contribute over 50% of formal sector manufacturing GVA: NSO.
- GST mop-up sees six-month high in Oct with ₹1.87 trillion, up 8.9% Y-o-Y.
Indian Markets
- Money Markets Minute: On Thursday, the interbank call money rate fell drastically below the Reserve Bank of India's standing deposit facility of 6.25% due to muted demand for funds as the liquidity surplus expanded due to government month-end spending. The four-day call money rate closed at 5.75%, compared with 5.80% on Wednesday for one-day loans. Financial markets were shut on Friday for Diwali holiday.
- Government Bond Brief: The 10-year benchmark government bond yield rose for the first time in four months, as a rebound in US Treasury yields overshadowed the effect of the local central bank's softening policy stance. On Thursday, the benchmark 10-year bond yield rose two basis points to 6.8469%. It increased by 10 basis points in October.
- Corporate Bond Beat: Corporate bond yields were largely unchanged last week across tenures, with trading limited to essential transactions in the festival week. The volumes were subdued on Thursday. During the week mutual funds had turned sellers for shorter-tenure maturity up to 3-year.
- Forex Flash: In October, the rupee declined 0.3% and reached an all-time low against the dollar on Thursday due to outflows from equities and concerns regarding the US election. However, the central bank's intervention maintained the local currency within a restricted range until October. The rupee closed at 84.0750 against the US dollar, almost unchanged from its previous close of 84.0775 on Wednesday. In Friday's session, the currency temporarily fell to a record low of 84.0950.
- Stocks Spotlight: Indian stocks slumped on Thursday, posting their worst monthly performance since March 2020, as large monthly foreign outflows and disappointing corporate profits dampened investor optimism. Both benchmarks fell by nearly 6% in October, their lowest monthly performance since March 2020, when COVID-19 lockdowns triggered a significant decline in global markets. The NSE Nifty 50 declined 0.56% to 24,205.35, while the BSE Sensex slid 0.69% to 79,389.06.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE556F08KT6 | 7.44 SIDBI 10APR28 | 2385 | 7.45 |
| INE261F08EK5 | 7.44 NABARD 24FEB28 | 2240 | 7.44 |
| INE062A08462 | 7.98 SBI PERP 24OCT34 C | 1570 | 5.82 |
| INE115A07PD7 | 6.40 LIC HSG FIN 24JAN25 | 1310 | 7.35 |
| INE040A08666 | 7.80 HDFC BANK 03MAY33 | 1225 | 7.46 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE0Z4807015 | 0% CYQURE INDIA PRIVATE LIMITED 17MAR2028 | 32 | 14.3 |
| INE549K08467 | 12.00 MUTHOOT FINCROP PERP - C | 19 | 4.73 |
| INE950O07487 | 8.25 MAHINDRA RURAL HOUSING 03AUG29 | 13 | 8.05 |
| INE516Y07444 | 6.75 PIRAMAL CAPITAL HSG 26SEP31 | 13 | 10.7 |
| INE804I08643 | 11.25 ECL FINANCE 03MAY25 | 12 | 12.58 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 6349 |
| 3Y | 2004 |
| 5Y | 2691 |
| 7Y | 338 |
| 10Y | 2756 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: The interbank call money rate may open above the RBI’s repo rate of 6.50% on expectation that banks’ demand for funds will increase to meet their reserve needs. The call rate is expected to trade in 6.00-6.75% range on Monday.
- Government Bonds: On Monday bond yields are expected to open firm following its US treasury yields. Before the US presidential election on Tuesday, traders are unlikely to buy gilts in large quantities. They will watch the election results for indications. The 10-year benchmark 7.10%, 2034 bond yields 6.78-6.90%.
- Corporate Bonds: Yields may continue to remain steady, and volumes are expected to remain subdued during the first few sessions this week as market participants will await US election results for further cues. The corporate bonds will also track local and US government bond markets for any further yield movement.
- Forex: The rupee is expected to trade in a tight band this week around 84 per dollar as the RBI is expected to intervene and dive into its forex reserves to stabilize the rupee. The currency is expected to trade at in a narrow range of between 83.98-84.08 per dollar on Monday.
- Stocks: On Monday, shares are expected to remain volatile as investors will closely monitor US elections on Tuesday and US Federal Reserve policy decision on Thursday. Domestically, investors will also take further cues from the quarterly results to be announced on Monday by IRFC, Exide Industries, ABB Limited, among others.
Events This Week
November 4, Monday:
- US Employment trends index for October.
- US Global manufacturing PMI for October.
- India S&P Global manufacturing PMI for October.
November 5, Tuesday:
- US International trade in goods & services for September.
- US Services PMI for October.
- US Presidential Election.
November 6, Wednesday:
- US Global services PMI for October.
- US FOMC meeting.
- India Services and composite PMI for October.
November 7, Thursday:
- US Unemployment insurance weekly claims report for Nov 2 week.
- US Weekly export sales.
- US Monthly wholesale trade for September.
- US Interest rate decision.
November 8, Friday:
- India FX Reserves for Nov 1 week.
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