According to S&P Global's HSBC India Services Purchasing Managers' Index, strong demand and easing inflationary pressures drove India's services sector's sharpest increase in five months in August. India's PMI rose to 60.9 in August, up from 60.3 in July and above the original estimate of 60.4. The industry has been expanding over the 50-mark since August 2021, and this PMI is the highest since March. Also, the most recent reading is well above the long-term average, which shows strong growth in the area. New orders, especially from the domestic market, drove this development, according to HSBC chief India economist Pranjul Bhandari.
Top 3 Leads Today
- Delinquencies in microfinance sector may push NBFC-MFI credit cost: ICRA.
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- Govt awards RIL 10 GWh capacity of advanced chemistry cell manufacturing.
Indian Markets
- Money Markets Minute: The call money rate remained unchanged at 5.75%, closing well below the RBI's standing deposit facility rate of 6.25%, due to low demand for funds amid surplus liquidity. The weighted average call rate slightly fell to 6.46% from 6.47% on Tuesday.
- Government Bond Brief: Government bond yields edged lower, following a fall in the US Treasury yields driven by hopes of sharp rate cuts in the US. The 10-year benchmark 7.10% 2034 bond closed with a yield of 6.86%, down from 6.87% on Tuesday. Turnover rise to ₹406.05 billion, up from ₹313.90 billion on Tuesday.
- Corporate Bond Beat: Corporate bond yields in the secondary market remained steady as investors stayed cautious ahead of key US unemployment data due on Thursday. Trading volume on the exchanges totalled ₹75.95 billion, down from ₹124.82 billion on Tuesday.
- Forex Flash: The rupee traded within a narrow 4-paise range and ended steady against the dollar, as the RBI's active dollar sales offset pressure from oil companies' purchases. The rupee settled at 83.9650 per dollar, just shy of its record closing low of 83.9725, and slightly higher than Tuesday's close of 83.9675.
- Stocks Spotlight: Indian benchmark indices ended in the red, with the Nifty breaking its 14-day winning streak, closing below 25,200 due to broad-based selling, except in the realty, FMCG, and pharma sectors. Following weak global cues, the indices opened gap-down and stayed in negative territory throughout the session. The Sensex down 0.25% at 82,352.64, and the Nifty fell 0.32% to 25,198.70.
International Markets
- US Stocks: Equities fell modestly in volatile trade on Wednesday after labour market data and Federal Reserve comments supporting a rate cut. In July, Labor Department data showed the US job postings fell to a 3-1/2-year low, signalling sustained labour market tightness that could help the Fed lower rates later this month. The Dow Jones Industrial Average rose 0.09%, while the S&P 500 fell 0.16% and the Nasdaq Composite lost 0.30%.
- Treasuries: Yields fell, and the two-year-to-10-year yield curve turned positive after Wednesday's mixed data. The Commerce Department reported that defence aircraft drove July US manufactured goods orders higher than projected. The US job postings fell to their lowest level since January 2021 in July, suggesting the labour market was slowing and prompting traders to bet on a 50-basis points Fed rate cut this month. The yield on benchmark 10-year US Treasury notes fell 8.9 basis points to 3.755%, while the 2-year note yield, fell 12.8 basis points to 3.76%.
- Currency: The dollar weakened against most major currencies as the July US job openings data shifted the chances in favour of more US rate cuts, while the yen benefited from a safe haven bid. The dollar index, which measures the greenback against a basket of currencies including the yen and euro, declined 0.39% to 101.30. The euro was up 0.34% at $1.108, while the dollar fell 1.17% against yen to 143.77.
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 | 240 | 1275 | 375 | 249 | - |
| NBFC | 231 | 922 | 37 | 327 | 21 |
| Housing Finance Company | 2 | 52 | 266 | 450 | 13 |
| Telecom | - | - | - | 575 | - |
| Public Sector Bank | - | - | - | 187 | 50 |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 8.27 CANARA BANK PERP 29AUG29 C | 2024-08-29 | 1534 | 8.27 | 8.25 |
| 7.75 LICHSGFIN 23AUG29 | 2024-08-23 | 1095 | 7.74 | 7.74 |
| 7.22 HPCL 28AUG29 | 2024-08-28 | 1074 | 7.22 | 7.22 |
| 7.81 TATA CHEMICALS LTD 20AUG2027 | 2024-08-20 | 950 | 7.81 | 7.81 |
| 9.50 CHOLAINVFIN PERP 22AUG34 C | 2024-08-22 | 926 | 9.62 | 9.57 |
| 7.61 LICHSGFIN 29AUG34 | 2024-08-29 | 450 | 7.61 | 7.61 |
| 7.30 BOB 27AUG34 | 2024-08-27 | 375 | 7.29 | 7.30 |
| 8.55 CENTURYTEX 30AUG29 | 2024-08-30 | 350 | 8.57 | 8.58 |
| 7.37 IIFCL 02SEP34 | 2024-09-02 | 300 | 7.36 | 7.35 |
| 8.35 CENTURYTEX 30AUG27 | 2024-08-30 | 250 | 8.35 | 8.35 |
| 7.74 LICHSGFIN 11FEB28 | 2024-08-29 | 250 | 7.76 | 7.76 |
| 8.70 ADANI ENERGY SOLUTIONS LTD 28AUG2034 | 2024-08-27 | 240 | 8.50 | 8.50 |
| 7.42 SBI 29AUG34 C 29AUG39 M | 2024-08-29 | 220 | 7.41 | 7.42 |
| 8.43 JSW STEEL LIMITED - CALL 29AUG2031 M | 2024-08-29 | 150 | 8.43 | 8.43 |
| 8.35 JSW STEEL LIMITED - CALL 29AUG2029 M | 2024-08-29 | 150 | 8.34 | 8.34 |
| 9.50 AFL 23AUG34 | 2024-08-27 | 85 | 9.31 | 9.49 |
| 10.25 SCNL 21AUG26 | 2024-08-22 | 71 | 11.64 | 11.80 |
| 10.40 SICREVACAP 23AUG26 | 2024-08-23 | 62 | 13.51 | 10.91 |
| 7.25 IRFC 29AUG34 | 2024-08-29 | 50 | 7.25 | 7.26 |
Source: Harmoney data analytics
Events This Week
September 5, Thursday:
- US Unemployment insurance weekly claims report for Aug 31 week.
- US Services data PMI for August.
September 6, Friday:
- US Employment report for August.
- US Weekly export Sales.
- India Bank loan growth Aug 19 week.
- India FX Reserves Aug 26 week.
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