Finance Minister Nirmala Sitharaman said Tuesday that scheduled commercial banks should focus on deposits, retail lending, and medium-term projects rather than long-term, high-risk funding to prevent a repeat of the asset-liability mismatch-related NPA crisis. She stressed that NaBFID can finance long-term projects better than commercial banks. Mobilizing deposits should start with banks. Not that core businesses should be limited to that. Sitharaman remarked at a Mumbai event that they can support initiatives in a conscious, medium-term strategy. it cannot lead to once more a situation that Indian banks were in where there was asset liability mismatch”, she added. After peaking at over 11% in 2017-18, scheduled commercial banks' gross and net NPA ratios fell to multi-year lows of 2.8% and 0.6% in March 2024.
Top 3 Leads Today
- Indian equities may underperform as investors turn to China, says Nomura.
- SEBI mulls halting sharing of data, not under its ownership, for research.
- Election results 2024: Historic Haryana hattrick for BJP; NC-Cong takes J&K.
Indian Markets
- Money Markets Minute: The call rate ended below the RBI's 6.50% repo rate due to low demand for funds, driven by surplus liquidity in the banking system. The one-day call money rate closed at 6.40%, up from 5.75% on Monday. Meanwhile, the weighted average call rate remained almost unchanged, slightly lower at 6.42%, compared to 6.43% the previous day.
- Government Bond Brief: Yields fell as traders bought bonds to compensate for recent selling, and towards the end of the session, short covering picked up ahead of the MPC meeting outcome. The 10-year benchmark 7.10%, 2034 gilt yield dropped to 6.81%, down from 6.85% on Monday. Turnover fell slightly, with ₹710.10 billion recorded, compared with ₹787.40 billion on Monday.
- Corporate Bond Beat: Yields on corporate bonds remained stable in the secondary market after a 3-4 basis point rise on Monday, as most market participants limited trading to basic portfolio adjustments. Total transactions reached ₹119.04 billion, slightly higher than Monday’s ₹115.60 billion.
- Forex Flash: The rupee remained stable against the dollar, likely due to the RBI intervention. The RBI is reported to have sold dollars to counter the impact of increased dollar purchases by oil marketing companies. The rupee closed at 83.9625 per dollar, moving within a narrow four-paise range. On Monday, it had settled slightly lower at 83.9775 per dollar.
- Stocks Spotlight: Benchmark indices broke a six-day losing streak, driven by gains in select heavyweight stocks and buying interest from domestic institutional investors. After six sessions of selling pressure that saw key indices drop around 6%, the Nifty 50 rose 0.9% to close at 25,013.15, while the Sensex gained 0.7%, ending at 81,634.81.
International Markets
- US Stocks: Tuesday saw Wall Street's benchmarks close higher, recovering some of the losses from the previous session as investors switched their attention from technology stocks to impending inflation data and the beginning of the third-quarter earnings season. The information technology index outperformed the S&P 500 index sectors, rising 2.1%. Palantir Technologies and Palo Alto Networks contributed 6.6% and 5.1%, respectively, to the growth. On Tuesday, the S&P 500 gained 0.97% to 5,751.13 points, while the Nasdaq Composite gained 1.45% to 18,182.92. The Dow Jones Industrial Average rose 0.30% to 42,080.37.
- Treasuries: Yields were Tuesday due to a variety of factors, including investor positioning, economic outlooks, and Federal Reserve monetary policy. Investors will keenly eye Thursday's inflation reading, which will be released along with the current consumer price index, to see if rates will be reduced further in November. Investors anticipate that the Federal Reserve will decrease interest rates by 25 basis points on Tuesday at its November meeting. The benchmark 10-year US note yield fell by 0.6 basis points to 4.02%.
- Currency: The dollar remained firm on Tuesday, hovering just below last week's seven-week highs as investors assessed the potential for additional the US rate reduction, with fears over the West Asian war and China's ailing economy providing support. The dollar index, which measures the US currency against key rivals, gained 0.06% to 102.54.
Trading Trends
Traded volume(in Cr) in corporate bonds by sector and maturity:
| Sectors | 0-1y | 1-3y | 3-5y | 5-10y | >10y |
|---|---|---|---|---|---|
| NBFC | 928 | 1823 | 735 | 633 | 292 |
| Financial Institution | 260 | 1970 | 703 | 6 | 10 |
| Private Sector Bank | 200 | 240 | 350 | 200 | - |
| Petrochemicals | 890 | - | - | - | - |
| Housing Finance Company | 150 | 275 | 155 | 183 | - |
Secondary trade details for recently issued primary corporate bonds:
Security Name |
Issue Date |
Trades Since Issue(Cr) |
Avg Yield(%) |
LTY (%) |
|---|---|---|---|---|
| 13.83 SHREM AJANTA INFRASTRUCTURE PRIVATE LIMITED 26SEP2027 | 2024-09-26 | 486 | 13.83 | 13.83 |
| 7.86 TCHFL 21SEP29 | 2024-09-23 | 425 | 7.83 | 7.78 |
| 8.01 M&MFINSERV 24DEC27 | 2024-09-26 | 255 | 8.00 | 8.01 |
| 7.49 BOI 26SEP29 C 26SEP34 M | 2024-09-26 | 187 | 7.52 | 7.51 |
| 10.15 SAMMAAN CAPITAL LIMITED 25SEP2029 | 2024-09-25 | 105 | 10.20 | 10.08 |
| 10.30 INDOSTAR 25SEP27 | 2024-09-25 | 104 | 10.64 | 10.70 |
| 8.47 BOBCARD PERP 30SEP34 C | 2024-09-30 | 75 | 8.46 | 8.46 |
| 9.90 SAMMAAN CAPITAL LIMITED 25SEP2027 | 2024-09-25 | 75 | 10.10 | 9.90 |
| 7.56 BAJAJ HFL 04OCT34 | 2024-10-04 | 75 | 7.56 | 7.56 |
| 10.45 MUTHOOTFINCORP 24DEC32 | 2024-09-24 | 52 | 11.00 | 10.96 |
| 9.35 ADANIAIRPORT 08SEP28 | 2024-10-01 | 50 | 9.76 | 9.76 |
| 7.96 EMBASSYOFFICE 27SEP27 | 2024-09-26 | 50 | 7.95 | 7.95 |
| 7.78 KMPL 17SEP29 | 2024-10-04 | 50 | 7.78 | 7.78 |
Source: Harmoney data analytics
Events This Week
October 9, Wednesday:
- US Monthly wholesale trade for August.
- US FOMC meeting minutes and economic forecast.
- India RBI MPC's meeting for monetary policy.
October 10, Thursday:
- US Unemployment insurance weekly claims report for Oct 5 week.
- US CPI for September.
- US Real earnings for September.
- US Weekly export sales.
October 11, Friday:
- US PPI for September.
- India FX reserves for Oct 4 week.
- India Industrial production for August.
- India Manufacturing production for August.
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