Weekly Macro Data Coverage June 10, 2019

Key Highlights:

  • Liquidity condition improved to a comfortable range as the WACR stands at 10 bps lower than the repo rate
  • RBI has trimmed repo rate by 25 bps to 5.75% during second MPC meeting of FY20
  • 10-year US sovereign yield has declined close to 2% during 4th week of May 2019.
  • 10-year Indian G-Sec yield has reached 7.07%
  • Central government debt issuances have reached Rs. 1,360 billion in FY20 (YTD). This was only Rs. 125 billion during the same time in FY19
  • Forward premium for three month has dropped from 4.19% to 3.95% over a week on period during 4th week of May, 2019

Liquidity

During last week of May 2019, the liquidity condition improved to a comfortable range as the WACR stands at 10 bps lower than the repo rate. For four consecutive weeks; the call money rate stands below the repo rate. With the higher capital inflows and resume government expenditure after election, the liquidity condition has been improving. Being concerned about growth momentum, RBI has trimmed repo rate by 25 bps to 5.75% during second MPC meeting of FY20. This will insist commercial banks to adjust other interest rates to the benchmark rate.

Capital Market

On the global capital market, the 10-year US sovereign yield has declined close to 2% during 4th week of May 2019. Over a month period, the global benchmark 10-year sovereign yield has reduced by almost 40 bps as investors are concerned about the slower job creation in the US. In the domestic market, the 10-year Indian G-Sec yield has reached close to 7% as a result both domestic as well global factors. However, the central government debt issuances have reached Rs. 1,360 billion in FY20 (YTD). This was only Rs. 125 billion during the same time in FY19. A strong supply of government debt indicates yield is expected to remain high.

Currency Trend

With a strong capital inflow, the Indian rupee has been appreciating against the US Dollar. The forward premium for three month has dropped from 4.19% to 3.95% over a week on period during 4th week of May, 2019. This indicates that Indian rupee will remain strong in coming months.


Interest rates and ratio:

Interest Rate

June 1

May 3

May 10

May 17

May 24

May 31

2018

2019

2019

2019

2019

2019

Policy Repo Rate

6.00

6.00

6.00

6.00

6.00

6.00

Call Money Rate (WA)

5.91

6.08

5.95

5.95

5.93

5.90

364-Day Treasury Bill Yield

6.93

6.51

6.54

6.47

6.41

6.30

2-Yr Indian G-Sec

7.63

6.71

6.59

6.50

6.40

6.27

10-Yr Indian G-Sec

7.94

7.43

7.46

7.41

7.27

7.07

10-Yr US G-Sec

2.95

2.47

2.39

2.32

2.13

2.08

AAA (Indian corporate)

8.45

8.65

8.50

8.41

8.42

8.11

Spread in bps (10Yr Indian-10Yr US)

499

496

507

509

514

499

Credit/Deposit Ratio

75.14

 

76.90

 

76.99

 

USD LIBOR (3 month)

1.7116

2.3731

2.3589

2.3558

2.3563

2.3545

Source: RBI, Investing.com


Acuité Portfolio Debt Instrument Benchmark Estimates (as on 10 June 2019):

Category

10-Yr Corporate Yield to Maturity

AAA*

NA

AA+

8.04%

AA

8.65%

Source: Acuité Research; # Discount Factor: 0.059; *Outside Benchmark


 

Deposit (In Rs. Lakh cr)

Bank Credit (In Rs. Lakh cr)

As on May 24, 2019

125.17

96.23

As on Apr 26,2019

124.84

96.21

As on May 25,2018

113.53

85.38

YTD (% change)

0.26%

0.02%

YoY (% change)

10.25%

12.71%

Source: RBI


 

Money Market Performance

Commercial Paper (Fortnight):

Outstanding (In Rs. Lakh cr)

Amount issued (In Rs. Lakh cr)

31-Mar-2019

4,830.8

1013.0

28-Feb-2019

5,208.1

900.8

31-Mar-2018

3,725.8

999.2

% Change (MoM)

-7.24%

12.45%

% Change (YoY)

29.66%

1.38%

Source: RBI

Indices

 

08-Jun-18

17-May-19

24-May-19

31-May-19

07-Jun-19

NSE Index

10,767.65

11,407.15

11,844.10

11,922.80

11,870.65

NSE Index Return

0.67

1.14

3.83

0.66

-0.44

BSE Index

35,443.67

37,930.77

39,434.72

39,714.20

39,615.90

BSE Index Return

0.61

1.25

3.96

0.71

-0.25



Liquidity Operation by RBI:

 

Source: RBI, Acuité Research; Note: Net injection (+) and Net absorption (-)

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

Commodity Price Index (3 Month Moving Average):

Commodity Price Movement (3 Month Moving Average):

Corporate debt (in Rs. Lakh Cr):

USD-INR Movement:

Source: RBI, Acuité Research

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