On Tuesday, the government introduced flexibility in the computation of long-term capital gains tax on unlisted assets, including properties, to address a major concern from the 2024-25 Budget. For assets like land or buildings sold before July 23, taxpayers can choose the new or old regime with a lower tax liability. The new LTCG system taxes at 12.5% without indexation. In contrast, the previous regime taxes 20% but enables indexation. This flexibility grandfather’s property transactions completed before the Budget's July 23 Parliament presentation.
Top 3 Leads Today
- SEBI mulls overhaul of investment advisor and research analyst rules.
- Despite PLI push, electronics imports top $20 bn for fifth quarter.
- RBI to lower rates by 100 bps by March 2026, as inflation eases: BOA.
Indian Markets
- Money Markets Minute: The call money market ended well below the RBI's standing deposit facility rate of 6.25% as bank demand for funds eased amidst ample liquidity. The one-day call money rate remained at 5.75%, unchanged from Monday, while the weighted average call rate slightly decreased to 6.41% from 6.44%.
- Government Bond Brief: Yields rose due to an overnight increase in US Treasury yields as recession fears eased. Traders booked profits after Monday's bond price surge, ahead of the monetary policy review. The 10-year 7.10% 2034 bond closed at 6.88%. Turnover was ₹585.60 billion, significantly lower than Monday's ₹1.04 trillion.
- Corporate Bond Beat: Yields on corporate bonds remained steady due to low activity in the secondary market ahead of the RBI’s monetary policy meeting. Trade volumes fell to ₹83.55 billion, down from ₹142 billion on Monday.
- Forex Flash: The rupee closed at a record low against the dollar due to continuous purchases by importers and foreign investors. It depreciated 0.1% to a lifetime low of 83.9650 a dollar, ending at 83.9525 a dollar, moving within a 12 paise range throughout the day.
- Stocks Spotlight: Uncertainties in global markets, including potential US recession, West Asia tensions, and yen carry trade unwinding, led investors to book profits. Benchmark indices closed slightly lower, with the Sensex down 0.16% to 78,633.56 and the Nifty down 0.26% to 23,992.55.
International Markets
- US Stocks: The S&P 500 and Nasdaq rose 1% on Tuesday after a spectacular sell-off, as Federal Reserve policymakers eased recession fears. The three main market indexes closed the day significantly below their daily highs, even though the Dow increased as well. According to US central bank policymakers, weaker-than-expected July jobs data does not indicate a recession, but the Fed will need to decrease interest rates to avert one.
- Treasuries: Yields rose as fears that the US economy was about to face a recession were dismissed, while safe-haven demand for US bonds fell as equities recovered. The 10-year US treasury yield jumped 12 basis points to 3.903% from 3.783% Monday. San Francisco Fed President Mary Daly said the jobs report gives "a little more room for confidence that we're slowing but not falling off a cliff" late Monday. However, she emphasized the significance of maintaining stability in the job market.
- Currency: The dollar made a comeback against major peers, while the yen remained steady at 7-month highs against the US currency. After some significant movements in recent days, the markets have regained a sense of stability. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose by 0.07% to 102.94.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 381 | 1119 | 682 | 397 | 85 |
| Financial Institution | 45 | 1005 | 915 | 111 | - |
| Housing Finance Company | 1 | 220 | 36 | 451 | - |
| Private Sector Bank | - | - | 15 | 633 | - |
| Diversified | 400 | 250 | - | - | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 7.37 IRFC 31JUL29 | 2024-07-31 | 1430.00 | 7.38 | 7.30 |
| 9.10 CHOLAINVFIN 27JUN31 | 2024-07-31 | 1325.00 | 9.10 | 9.10 |
| 7.98 BAJAJ FINANCE 31JUL29 | 2024-07-31 | 752.00 | 7.97 | 7.97 |
| 8.01 TATACAPITAL 21JUL34 | 2024-07-23 | 427.00 | 7.99 | 7.94 |
| 8.60 GODREJFINLTD 25NOV27 | 2024-07-25 | 250.00 | 8.65 | 8.66 |
| 8.50 GODREJHSGFIN 30NOV27 | 2024-07-30 | 240.00 | 8.55 | 8.57 |
| 7.39 IIFCL 01AUG39 | 2024-08-01 | 195.00 | 7.38 | 7.38 |
| 8.50 CHOLAINVFIN 25JUL27 | 2024-07-25 | 160.00 | 8.49 | 8.46 |
| 7.39 IREDALTD 24JUL34 C 22JUL39 M | 2024-07-24 | 130.00 | 7.38 | 7.38 |
| 8.1841 TFSIN 29SEP27 | 2024-08-01 | 90.00 | 8.20 | 8.20 |
| 9.75 INDIABULLS HOUSING 23JUL29 | 2024-07-23 | 69.03 | 10.95 | 11.60 |
| 10.30 IKFFIN 30JUL27 | 2024-08-01 | 55.00 | 11.16 | 11.35 |
Source: Harmoney data analytics
Events This Week
August 7, Wednesday:
- US EIA weekly petroleum status report for Aug 2 week.
- India M3 Money Supply.
August 8, Thursday:
- US Unemployment insurance weekly claims report for Aug 3 week.
- US Weekly export sales.
- US Monthly wholesale trade for June.
- India Interest rate decision.
- India Reverse REPO rate.
- India Cash reserve ratio.
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