Growth in India's dominant services sector slowed in November as new orders and output fell, but continuous demand led to an increase in business sentiment and a "hiring surge," according to a business survey released on Wednesday.The main Purchasing Managers' Index for November, collected by S&P Global and issued by HSBC, was 58.4, nearly steady from 58.5 in October but lower than an earlier forecast of 59.2. For the 40th consecutive month, the index has remained above the neutral 50-point line separating contraction and expansion. Pranjul Bhandari, chief India economist at HSBC, stated that employment in the services sector has grown at the quickest rate since the survey began in 2005.
Top 3 Leads Today
- India's external debt rises by $31 billion to $647 billion in 2023: World Bank report.
- Need to build capabilities for assessment of climate risks, says RBI Rao.
- More potential for illegal trade as global markets interconnect, says CBIC head.
Indian Markets
- Money Markets Minute: The one-day call money rate closed below the RBI's repo rate of 6.50% on Wednesday, reflecting reduced demand for funds from banks amid a liquidity surplus. The rate settled at 6.40%, down from 6.45% the previous day. As per the latest RBI data, liquidity in the banking system stood at a surplus of ₹1 trillion on Tuesday, compared with ₹894.51 billion on Monday.
- Government Bond Brief: Yields fell on Wednesday as expectations of a rate cut by the RBI's MPC solidified, prompting traders to bolster their portfolios ahead of the meeting. The 10-year benchmark 6.79% 2034 bond yield fell to 6.68%, down from 6.71% the previous day, marking its lowest level since February 14, 2022. Market activity was robust, with turnover rising to ₹904.20 billion on Wednesday, compared with ₹601.15 billion on Tuesday.
- Corporate Bond Beat: Corporate bond yields edged lower on Wednesday as investors increased their holdings of securities ahead of the RBI's MPC meeting, set to conclude on Friday. Market participants are anticipating potential policy actions, such as a rate cut, a cash reserve ratio adjustment, or other liquidity measures. Trading activity was robust on Wednesday, with deals totalling ₹45.78 billion on the exchanges, up from ₹40.35 billion recorded on Tuesday.
- Forex Flash: The rupee ended at a record low against the dollar on Wednesday, weighed down by dollar demand from banks on behalf of importers and a strengthening dollar index. After fluctuating within a narrow 10-paise range during the session, the Indian currency closed at 84.7400 per dollar, compared with its previous close of 84.6850 per dollar.
- Stocks Spotlight: Indices extended their gains on Wednesday, closing in the green for the fourth consecutive session, buoyed by strength in banking stocks amid rising expectations of an upcoming cash reserve ratio cut by the RBI. The benchmark Sensex advanced 0.14% to close at 80,956.33, while the broader Nifty 50 edged up 0.04% to close at 24,467.45.
International Markets
- US Stocks: Benchmark stock indexes on Wall Street hit new highs, with tech stocks and statements from Federal Reserve officials driving the gains. Salesforce, an enterprise cloud computing business, and Marvell Technology, a chipmaker, both reported outstanding third-quarter results. The S&P 500 surged 0.6% to 6,086 and the Nasdaq Composite jumped 1.3% to 19,735, both at record highs, while the Dow climbed 0.7% to 45,014.
- Treasuries: Yields fell after Federal Reserve Chair Jerome Powell stated that the recent economic momentum will allow the central bank to "be a little more cautious as we try to find neutral" with interest rate policy. Investors are looking for more signals on the Fed's policy course for next year, with the November jobs report due on Friday. The yield on benchmark US 10-year notes declined 3.3 basis points to 4.188%, from 4.221% on Tuesday.
- Currency: The euro strengthened moderately versus the US dollar on Wednesday but fell from session highs following the widely predicted collapse of the French government following a no-confidence vote by opposition legislators. However, the dollar was barely moved as the December interest rate cut probability remained on track amid a sign of a falling American economy. The dollar index remained unchanged at 106.33, while the euro was slightly up against the dollar at $1.0512.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| Financial Institution | 850 | 1790 | 2210 | 741 | 150 |
| NBFC | 538 | 1246 | 440 | 670 | 426 |
| Housing Finance Company | 105 | 223 | 161 | 831 | - |
| Private Sector Bank | 420 | 50 | - | 171 | - |
| Telecom | 100 | 25 | - | 321 | - |
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 | 1535 | 7.21 | 7.11 |
| 7.37 IREDA 27NOV31 | 2024-11-27 | 910 | 7.37 | 7.37 |
| 7.41 BOB 28NOV34 C 28NOV39 M | 2024-11-28 | 745 | 7.40 | 7.41 |
| 7.41 BOI 29NOV34 | 2024-11-29 | 385 | 7.41 | 7.39 |
| 91.00 ICICI HOME FINANCE 25FEB28 | 2024-11-26 | 355 | 8.16 | 8.16 |
| 7.74 LIC 22OCT27 | 2024-11-29 | 300 | 7.75 | 7.75 |
| 7.22 ULTRATECH 24NOV34 | 2024-11-26 | 300 | 7.22 | 7.22 |
| 10.20 CLIX CAPITAL 18MAR27 | 2024-11-19 | 219 | 10.55 | 10.98 |
| 8.25 GIC HOUSING 19JUN26 | 2024-11-21 | 200 | 8.33 | 8.34 |
| 7.75 ICICI HOME FINANCE 24NOV34 | 2024-11-26 | 190 | 7.75 | 7.75 |
| 10.00 MUTHOOT CAPITAL 20NOV26 | 2024-11-21 | 141 | 10.72 | 11.00 |
| 8.10 GODREJ INDUSTRIES 22MAY28 | 2024-11-22 | 125 | 8.12 | 8.12 |
| 0% GOLDEN GUILD PROPERTIES PRIVATE LIMITED 27NOV2026 | 2024-11-28 | 100 | 20.08 | 20.00 |
| 9.50 HERO FINCORP PERP 25MAY35 C | 2024-11-25 | 75 | 9.36 | 0.00 |
| 9.60 ARKA 24NOV34 | 2024-11-26 | 75 | 9.21 | 9.02 |
| 8.15 PNB HOUSING 29 |
Source: Harmoney data analytics
Events This Week
December 5, Thursday:
- US OPEC Meeting.
- US Initial Jobless Claims for Nov 29 week.
December 6, Friday:
- US Nonfarm Payrolls for November.
- US Unemployment Rate for November.
- India RBI Interest Rate Decision.
- India FX Reserves for Nov 25 week.
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