SEBI proposes a stock exchange-based liquidity window for debt securities investors to boost corporate bond market liquidity, particularly for retail investors. In its Friday draft circular, SEBI proposed that the liquidity window facility would allow issuers to offer put options on debt instruments at pre-specified dates or intervals to minimise the issue. Investors will be able to sell their debt instruments back to issuers before maturity with put options. It can only be available for public issue or private placement debt securities proposed to be listed.
Top 3 Leads Today
- India's urban unemployment rate eases to 6.6% Apr-Jun from 6.7% Jan-Mar.
- India's foreign exchange reserves come off record highs.
- India cuts windfall tax on petroleum crude, govt notification shows.
Market Recap: The Week That Was
- Money Markets Minute: The call money rate ended the week lower than the Reserve Bank of India's standing deposit facility rate of 6.25%, as the banking system's liquidity remained in surplus. To reduce excess liquidity, the RBI held a three-day reverse repo auction for ₹1 trillion rupees. Banks deposited ₹923.37 billion at the variable-rate reverse repo.
- Government Bond Brief: The yields on government bonds rose slightly on Friday, following the trend set by US bond yields. This was influenced by positive US economic data, which lowered expectations of a significant interest rate cut by the Federal Reserve. However, the yields were marginally down on a weekly basis. The yields on 10-year benchmark government bonds fell to 6.87% on Friday from 6.88% a week ago.
- Corporate Bond Beat: Corporate bond yields remained stable across tenures in the secondary market last week due to a lack of fresh triggers, and investors are looking ahead to primary issuances this week. Few insurance firms made need-based purchases, whereas banks and mutual funds sold.
- Forex Flash: The rupee remained in a tight band before finishing virtually flat on Friday, as most of its Asian rivals reversed early losses and minor dollar sales from foreign banks kept the currency above its all-time lows. The rupee was nearly flat week-over-week. The rupee ended the day at 83.94 against the US dollar, showing minimal change compared to its previous closing rate of 83.9475.
- Stocks Spotlight: Indian shares ended a two-week losing streak, powered by information technology firms, after strong US economic data allayed fears of a recession in the world's largest economy, boosting global risk appetite. The NSE Nifty 50 index rose 1.65% to 24,541.15 and gained 0.7% weekly. The Sensex rose 1.68% to 80,436.84 and 0.9% for the week. The Nifty had its greatest day since July 26, and the Sensex was its biggest in almost two months.
Trading Trends
Most actively traded Corporate bonds in the Standard Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE020B08DU5 | REC FRB 31OCT24 | 1200 | 7.35 |
| INE020B08FH7 | 7.55 REC 31OCT26 | 1105 | 7.57 |
| INE261F08EI9 | 7.70 NABARD 30SEP27 | 870 | 7.59 |
| INE018E08367 | 8.25 SBICARDS 08AUG34 | 862 | 8.24 |
| INE020B08FF1 | 7.56 REC 31AUG27 | 825 | 7.50 |
Most actively traded Corporate bonds in the Odd Lot Market:
| ISIN | Security Name | Volume (Cr) | Avg. Yield(%) |
|---|---|---|---|
| INE248U07FO2 | 0% 360ONEPRIME 13MAR26 | 51 | 9 |
| INE07HK07742 | 10.20 KRAZYBEESERVICES 19DEC25 | 28 | 11.85 |
| INE0OOQ07213 | 15.00 TRUCREDITS 28JUL25 | 23 | 15.22 |
| INE0NES07105 | 11.40 KEERTANA 10MAY26 | 22 | 13.68 |
| INE457A08167 | 7.89 BOM 04JUL29 C 04JUL34 M | 21 | 7.81 |
Traded volume in corporate bonds by maturity:
| Maturity | Volume(in Cr) |
|---|---|
| 1Y | 5426 |
| 3Y | 4674 |
| 5Y | 3249 |
| 7Y | 1189 |
| 10Y | 1906 |
Source: Harmoney data analytics
The Week Ahead
- Money Markets: The one-day call money rate is expected to open firm around 6.50% as the demand for funds may increase during early trade. However, it is expected to ease later due to the surplus liquidity. The one-day call rate is expected to trade in the 6.20-6.65% range.
- Government Bonds: Yields will likely fall marginally on Monday, reflecting the drop in US treasury yields after dismal homebuilder confidence data on Friday backed bets of a rate cut by the US Federal Reserve in September. The US Census Bureau reported that single-family home starts declined 14.1% year on year to 851,000 units in July, marking the fifth consecutive monthly decline.
- Corporate Bonds: Secondary market yields are expected to stay stable, with investors keeping an eye on government bond yields for further guidance. This week, trade volumes may be low as investors are likely interested in picking up primary issuance.
- Forex: The rupee may open firm on Monday, with further direction coming from movements in the dollar index and crude oil prices. If the rupee approaches 84.00 per dollar, the RBI will most likely intervene through dollar sales. Investors will also keep an eye on the situation in West Asia this week.
- Stocks: Domestic equities may open higher on Monday after a flood of US data released last week eased investor concerns about a US recession. This week, equities investors will be closely watching the global economic outlook. They will focus on the US FOMC minutes, which will be released on Wednesday, and the HSBC India PMI Flash data for August, which will be announced on Thursday.
Events This Week
August 19, Monday:
- US Quarterly retail e-commerce sales for Q2.
August 21, Wednesday:
- US Advance quarterly services for Q2.
- US EIA weekly petroleum status report for Aug 16 week.
- US FOMC meeting minutes.
- India M3 money supply for Aug 9 week.
August 22, Thursday:
- US Unemployment insurance weekly claims report for Aug 17 week.
- US Weekly export sales.
- US PMI data for August.
- US Existing home sales for July.
- India PMI data for August.
August 23, Friday:
- US New residential sales for July.
- India Bank loan growth for Aug 9 week.
- India deposit growth for Aug 9 week.
- India Foreign exchange reserves for Aug 16 week.
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