Finance Minister Nirmala Sitharaman stated Friday that the second quarter's weak GDP growth was caused by a fall in capital investment owing to general elections in the first quarter. “Growth numbers may not suffer. The third quarter should make up for this. India has great potential to remain the fastest-growing economy", Sitharaman remarked. She spoke with 15th Finance Commission Chairman N K Singh at India-Japan Forum 2024. Sitharaman said the current GDP growth estimates should be examined in the context of a first-quarter economy and government structure focused on elections, which affected Q2. July–September FY25 GDP growth in India fell to 5.4%, which is a seven-quarter low. Capital expenditure fell roughly 15% year-over-year in April–October FY25, according to the Controller General of Accounts.
Top 3 Leads Today
- BRICS have no interest in weakening USD, Indian foreign minister says.
- India's RBI supports growth with liquidity boost but holds rates amid high inflation.
- Forex reserves up $1.51 bn to $658.091 bn; end consecutive weeks of decline.
Indian Markets
- Money Markets Minute: The interbank call money rate eased on Saturday below the Reserve Bank of India’s standing deposit facility rate of 6.25% amid low demand for funds from banks. The call rate closed at 6.00% on Saturday down from its previous close of 6.24%. The liquidity in the banking system narrowed to ₹423.70 billion on Thursday from ₹659.05 billion on Wednesday as per latest RBI data.
- Government Bond Brief: India's benchmark 10-year bond yield rose 4 basis points to 6.7214% after the RBI reduced banks' cash reserve ratio by 50 basis points to 4% on Friday. The cut will be implemented in two tranches of 25 basis points each, beginning on December 14 and December 28. The benchmark 6.79%, 2034 bond yields closed at 6.74% on Friday, up from 6.68% the previous day. Bond yields were steady week on week.
- Corporate Bond Beat: Following the RBI's decision to maintain its benchmark interest rate at 6.50%, corporate bond yields increased by 3 to 4 basis points across tenures tracking government bonds. Yields were nearly flat on a weekly basis. Last week, trade and volume were low because investors avoided taking fresh bets before the central bank announced its monetary policy on Friday.
- Forex Flash: The Indian rupee surged on Friday as the dollar fell and the Indian central bank maintained its policy rates constant while lowering banks' cash reserve ratios, essentially easing monetary conditions amid sluggish economic growth. The rupee closed at 84.6875 versus the US dollar, up from 84.7325 in the previous session. The currency fell for the fifth week in a row, by 0.2%.
- Stocks Spotlight: Financials were the primary driver of the Indian benchmark indexes' most successful week since June on Friday, as the central bank reduced the cash reserve ratio that banks are required to maintain, thereby alleviating monetary conditions. The NSE Nifty 50 closed down 0.12% at 24,677.8, while the BSE Sensex fell 0.07% to 81,709.12. The Nifty and Sensex rose 2.3% and 2.4%, respectively, this week, marking their highest levels since early June, when the country's national election results guaranteed policy continuity.
Trading Trends
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE146O07508 | 9.00 HINDUJA LEYLAND FINANCE 14NOV27 | 30 | 8.31 |
| INE296G07218 | 10.00 MUTHOOT CAPITAL 20NOV26 | 29 | 10.95 |
| INE551U07357 | 11.26 SAMUNNATI FINANCIAL INTERMEDIATION & SERVICES PRIVATE LIMITED 05DEC2025 | 29 | 11.86 |
| INE01YL07318 | 10.90 EARLYSALARY 06MAY26 | 23 | 12.04 |
| INE160A08217 | 8.50 PNB PERP 17JAN27 C | 22 | 3.1 |
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE556F08KU4 | 7.51 SIDBI 12JUN28 | 3450 | 7.46 |
| INE261F08EK5 | 7.44 NABARD 24FEB28 | 1625 | 7.43 |
| INE261F08DX0 | 7.58 NABARD 31JUL26 | 1500 | 7.53 |
| INE020B08FL9 | 7.34 REC 30APR30 | 950 | 7.32 |
| INE04K307016 | 0% MSRDC SEA LINK LIMITED 30MAR2046 | 946 | 8.15 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 6984 |
| 3Y | 5026 |
| 5Y | 3072 |
| 7Y | 843 |
| 10Y | 4324 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: The interbank call money rate is expected to open higher than the RBI repo rate of 6.50%, as banks' demand for cash is expected to grow in early trading on Monday. Liquidity in the banking system will probably stay constrained until the CRR drop is phased in two tranches in December due to tax deducted at source and excise duty outflows. On Monday, the call rate is expected to trade between 6.00 and 6.75%.
- Government Bonds: Following Friday's drop in US Treasury yields, domestic bond yields are expected to fall a little on Monday. After better-than-expected US non-farm payroll, benchmark US government yields fell to a 6-week low Friday. Foreign investors are expected to sell domestic bonds this week following the Reserve Bank of India's Monetary Policy Committee decision on Friday to hold interest rates steady. Bond market traders will also watch the RBI’s new governor announcement this week. On Monday, the 6.79%, 2034 bond yields 6.72-6.80%.
- Corporate Bonds: Yields will track movement in government bond yields and treasury this week for further cues. Trade volumes in the secondary market likely to be modest as investors may do only need based trading and await on the announcement of the new RBI governor this week.
- Forex: The rupee is likely to weaken again the dollar on Monday after better-than-expected US jobs report showing higher unemployment and modest job gains overall. The domestic will also track crude oil prices movement on Monday for further cues. The rupee is expected to trade in a range of 84.70-84.85 per dollar on Monday.
- Stocks: The benchmark indices are likely to rise in early trade on Monday tracking global stock indices. Investors will take more cues from domestic economic data, and institutional investment flows this week. The rupee exchange rate and crude oil prices will also have a substantial impact on market patterns. Investors will closely monitor India's industrial production data for October and CPI inflation for November slated for release this week on Thursday.
Events This Week
December 9, Monday:
- US Oct Monthly Wholesale Trade.
December 10, Tuesday:
- US Quarterly Financial Report.
December 11, Wednesday:
- US CPI for November.
- US Real Earnings for November.
- India M3 Money Supply Nov 25 week.
December 12, Thursday:
- US Unemployment Insurance Weekly Claims Report Dec 7 week.
- US Weekly Export Sales.
- US PPI for November.
- US Quarterly Services.
- India Consumer Price Index for November.
- India Cumulative Industrial Output for October.
- India Industrial Output for October.
- India Manufacturing Output for October.
December 13, Friday:
- US Import & Export Price Indexes for November.
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