According to Citigroup, India will have to generate more than 12 million jobs annually for the next ten years in order to accommodate the influx of new individuals entering the workforce. According to a recent report by Samiran Chakraborty and Baqar Zaidi, India's job generation is limited to only 8 to 9 million per year. The quality of jobs being created remains a challenge, as a significant portion of the workforce, approximately 46%, is still engaged in the agriculture sector. It is worth noting that this sector contributes less than 20% to the overall gross domestic product.
Top 3 Leads Today
- FM Nirmala Sitharaman set to present Budget on July 23.
- India will be unable to plug job gaps even with 7% growth, says Citigroup.
- Bajaj Auto launches CNG motorcycle at starting price of ₹95,000.
Market Recap: The Week That Was
- Money Markets Minute: Last week, the one-day call money rate fell marginally, driven by low demand for funds from banks. The weighted average call money rate fluctuated but settled at 6.67%. On Friday, the call money rate ended below the RBI’s standing deposit facility rate of 6.25%.
- Government Bond Brief: The yields on the 10-year benchmark bond fell over the week, following the decline in the US treasury yields last week. This was driven by the anticipation that the US Federal Reserve might lower its key interest rate in September. Stronger-than-anticipated demand for government bonds at the weekly auction prevented rates from falling any lower on Friday.
- Corporate Bond Beat: Last week, short-term bond yields fell by 2 basis points in line with government bond yields. Corporate bond rates on 5-year and longer maturities remained stable amid a lack of fresh clues and low market participation. Few mutual funds were active buyers of corporate bonds in the secondary market with maturities of up to three years.
- Forex Flash: The rupee reported weekly losses against the dollar by 0.1% last week as the demand for US dollars by importers picked up, hurting the Indian rupee. The rupee closed almost unchanged on Friday at 83.4850 despite gains by most of its Asian counterparts ahead of the release of the highly anticipated US jobs data on Friday.
- Stocks Spotlight: The benchmark Nifty 50 closed at a new high on Friday and posted its fifth straight week of advances, its longest this year. Energy and IT stocks helped the NSE Nifty 50 set a record closing high for the fourth time last week at 24,323.85, up 0.09%. The BSE Sensex also matched the Nifty’s weekly gains and rose 1.2% despite finishing on Friday with a slight decline of 0.07% at 79,996.6 points.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE062A08421 | 7.36 SBI 27JUN39 | 1644 | 7.356378 |
| INE053F08304 | 7.23 IRFC 15OCT26 | 1350 | 7.55 |
| INE557F08FZ1 | 7.59 NHB 08SEP27 | 1335 | 7.609979 |
| INE040A08708 | 6.00 HDFC BANK 29MAY26 | 840 | 7.993155 |
| INE261F08EJ7 | 7.64 NABARD 06DEC29 | 782 | 7.642710 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE08XP07233 | 10.01 AKARA 21DEC25 | 27.92 | 15.512607 |
| INE342T07494 | 10.50 NAVIFIN 18JUN27 | 27.44 | 11.040786 |
| INE501X07604 | 10.25 AYEFINANCE 20MAR26 | 20.88 | 11.441728 |
| INE07HK07742 | 10.20 KRAZYBEESERVICES 19DEC25 | 20.80 | 11.838462 |
| INE516Y07444 | 6.75 PIRAMALHFC 26SEP31 | 20.08 | 10.716572 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 6191 |
| 3Y | 6137 |
| 5Y | 3261 |
| 7Y | 748 |
| 10Y | 1343 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: The one-day call money rate is expected to open higher than the RBI's repo rate of 6.50% on Monday, as bank demand for cash might increase. However, it will likely decrease during the week due to ample liquidity.
- Government Bonds: On Monday, yields may fall as the US unemployment rate rose to 4.1%, the highest since October 2021, against the expectation of 4.0%. Domestic bond markets will also keenly track any increase in crude oil prices this week. Before the Union Budget for 2024–25 is released on July 23, investors are likely to avoid making big bets.
- Corporate Bonds: Yields are likely to remain steady on Monday, and domestic government bond yields will be tracked for further cues. Trade volumes are expected to be thin next week as investors may avoid any major positions ahead of the Union Budget for 2024-25, which will be announced later in July.
- Forex: The rupee may open higher versus the dollar on Monday after data indicated that US job growth slowed marginally in June as the unemployment rate rose. This reinforces the idea that the Federal Reserve will begin cutting interest rates in September.
- Stocks: Domestic shares are anticipated to be volatile this week, as key indexes have been approaching record highs for several weeks, and investors are concerned about the higher valuation. This week, investors will monitor the monsoon's impact on the rural economy and crude oil prices to assess general market sentiment.
Events This Week
July 8, Monday
- US Consumer Credit for May.
July 9, Tuesday:
- US Federal Powell presents Monetary Policy Report.
- EIA to release short-term energy outlook.
- Five states to raise ₹61 billion through bond sale.
July 10, Wednesday:
- US Monthly Wholesale Trade for May.
- US EIA Weekly Petroleum Status Report for Jul 5 week
- India M3 Money Supply for Jun 28 week.
July 11, Thursday:
- US Real Earnings for June.
- US Unemployment Insurance Weekly Claims Report.
- US Weekly Export Sales.
- US CPI for June.
- US EIA Weekly Natural Gas Storage Report for Jul 5 week.
July 12, Friday:
- US PPI for June.
- India Bank Loan Growth for Jun 28 week.
- India Deposit Growth for Jun 28 week.
- India Foreign Exchange Reserves for Jul 5 week.
- India Industrial Production for May.
- India CPI Inflation Rate for June.
- India Manufacturing Production for May.
- India Inflation Rate for June.
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