Weekly Macro Data Coverage Oct 14, 2019

Key Highlights:

  • Weighted average call money rate further subsided to 5.26% during the first week of October, 2019 and adjusted with the revised policy rate
  • YoY credit offtake has reduced to 8.8% during the second fortnight of September 2019 due to a hostile base
  • 10-year US sovereign yield has surged by 20 bps to 1.73% over the week on account of optimistic development in US-China trade row
  • India 10-year sovereign yield has reduced by 36 bps to 6.47% in reaction to the revised policy rate
  • The bid-ask spread sovereign bond indicating an improvement in liquidity/ demand for the instruments.

Liquidity

The weighted average call money rate further subsided to 5.26% during the first week of October, 2019 adjusting to the revised policy rate. During this week, the MPC committee has trimmed the repo rate by 25 bps to 5.15%. Excess liquidity in the system has further increased to Rs. 1.68 lakh crore as credit offtake has reduced to 8.8% due to a hostile base. However, as the festive season commences, last two fortnights have witnessed a positive trend in incremental credit offtake.

Capital Market

On the global capital market front, the 10-year US sovereign yield has surged by 20 bps to 1.73% over the week. This might be happening because of two reasons. First, investors are optimistic regarding the US-China trade negotiations and switching from capital market to equity market. Second, a reinvigorated Chinese economy may drive up commodity prices, leading to inflationary expectations. On the domestic market front, the 10-year sovereign yield has reduced by 36 bps to 6.47% in reaction to the revised policy rate. The bid-ask spread sovereign bond has also reduced to 0.66 bps in September 2019 from 0.71 bps in August 2019 – indicating an improvement in demand for the sovereign bonds.

Currency Trend

The currency market has been stabilizing after a currency war during August 2019. USD-INR currency pair has been hovering at 70.9 for past three weeks. As commodity prices are continuing to remain weak, domestic currency is expected to strengthen with lower trade deficit. The down-ward trend in over-night LIBOR rate indicates that global liquidity has been increasing. This gives a sense of stronger emerging markets currencies against the USD.

Interest rates and ratio:

Interest Rate

Oct 05

Sep 06

Sep 13

Sep 20

Sep 27

Oct 04

2018

2019

2019

2019

2019

2019

   Policy Repo Rate

6.50

5.40

5.40

5.40

5.40

5.15

   Call Money Rate (WA)

6.34

5.34

5.31

5.36

5.31

5.26

   364-Day Treasury Bill Yield

7.77

5.69

5.65

5.60

5.60

5.53

   2-Yr Indian G-Sec

7.69

5.77

5.73

5.91

5.78

5.75

   10-Yr Indian G-Sec

8.02

6.73

6.77

6.91

6.85

6.47

   10-Yr US G-Sec

3.17

1.90

1.72

1.69

1.53

1.73

    AAA (Indian corporate)

8.84

8.01

7.85

7.70

7.84

7.54

   Spread in bps (10Yr Indian- US)

485

483

505

522.3

532.1

474

   Credit/Deposit Ratio

76.12

-

76.33

-

75.71

-

    USD LIBOR (Over-night)

2.1652

2.0976

2.0883

2.1549

1.8299

1.8224

Forward Premia of  US$ 1-month

4.73

4.18

4.57

4.40

3.98

4.40

US$ 3-month

4.59

4.24

4.43

4.17

3.95

3.87

US$ 6-month

4.40

4.28

4.48

4.38

4.23

4.18
Source: RBI, Investing.com


Deposit (In Rs. Lakh cr)

Bank Credit (In Rs. Lakh cr)

  As on Sep 27,2019

129.07

97.11

  As on Aug 30,2019

127.80

86.81

  As on Sep 28,2018

118.00

89.82

  MoM (% change)

0.99%

0.8%

  YoY (% change)

9.38%

8.79%
Source: RBI


Money Market Performance

Commercial Paper (Fortnight):

Outstanding (In Rs. Billion)

Amount issued (In Rs. Billion)

  30-Jun-19

5,039.40

1076.9

  15-Jun-19

5,561.80

1078.7

  30-Jun-18

4,918.30

1267.3

  % Change (MoM)

-9.39%

-0.17%

  % Change (YoY)

2.46%

-15.02%
Source: RBI


Indices

 

05-Oct-18

13-Sep-19

20-Sep-19

27-Sep-19

04-Oct-19

  NSE Index

10,316.45

11,075.90

11,274.20

11,512.40

11,174.75

  NSE Index Return

-5.62

1.18

1.79

2.11

-2.93

  BSE Index

34,376.99

37,384.99

38,014.62

38,822.57

37,673.31

  BSE Index Return

-5.11

1.09

1.68

2.13

-2.96




Liquidity Operation by RBI:


Source: RBI, Acuité Research;

Note: Net injection (+) and Net absorption (-)

Source: RBI




Corporate debt (in Rs. Lakh Cr):






Net Debt Issuance by Centre and State Government (Rs. Billion):


 

Source: Acuité Research, RBI




Commodity Price Index (3 Month Moving Average):






Commodity Price Movement (3 Month Moving Average):






USD-INR Movement:


Source: RBI, Acuité Research

 

Birabrata Panda

Sr. Statistician/Economist