Weekly Macro Data Coverage June 17, 2019

Key Highlights:

  • Weighted average call money rate (WACR) on a downward trajectory for past four weeks has reached 5.80% during the first week of June 2019
  • During the same week, RBI has trimmed its policy rate for LAF by 25bps to 5.75%
  • Deposit has been growing at 10.25% in May, 2019. Credit offtake, on the other hand, stands 12.7%.
  • 10-year US sovereign yield has been declining for past four weeks
  • the 10-year Indian G-Sec yield on the similar trend and reached close to 7%
  • The factors attributing to the softening bond yield are lower oil price, fall in central government’s net debt issuances and higher demand for Indian sovereign bond.

Liquidity

The weighted average call money rate (WACR) on a downward trajectory for past four weeks has reached 5.80% during the first week of June 2019. A downward trend in interbank lending rate is indicating a healthy liquidity condition in the banking sector. During the same week, RBI has trimmed its policy rate for LAF by 25bps to 5.75%. In order to adjust with the new benchmark rate, the call money rate will further decline to below 5.75%. On a positive note, deposit has been growing at 10.25% in May, 2019. Credit offtake, on the other hand, stands at 12.7%. Improvement in deposit growth as compared to offtake will be crucial in monetary transmission view point.

Capital Market

On the global capital market front, the 10-year US sovereign yield has been declining for past four weeks. The yield has reached close to 2% by end of May, 2019. On the domestic capital market perspective, the 10-year Indian G-Sec yield on the similar trend and reached close to 7%. The factors attributing to the softening bond yield are lower oil price, fall in central government’s net debt issuances and higher demand for Indian sovereign bond.

Currency Trend

On the currency market side, the emerging market currencies are strengthening against the US Dollar. As the US 10-year sovereign yield has reached close to 2%, the yield chasing capitals are flowing to the emerging markets. Similarly, with a weak economic outlook, the investors are expecting a shift in the Fed’s stance on monetary policy.


Interest rates and ratio:

Interest Rate

June, 8

May,10

May,17

May,24

May,31

June,7

2018

2019

2019

2019

2019

2019

Policy Repo Rate

6.25

6.00

6.00

6.00

6.00

5.75

Call Money Rate (WA)

5.95

5.95

5.95

5.93

5.90

5.81

364-Day Treasury Bill Yield

6.99

6.54

6.47

6.41

6.30

6.19

2-Yr Indian G-Sec

7.53

6.59

6.50

6.40

6.27

6.21

10-Yr Indian G-Sec

7.95

7.46

7.41

7.27

7.07

7.04

10-Yr US G-Sec

2.92

2.39

2.32

2.13

2.08

2.08

AAA (Indian corporate)

8.84

8.50

8.41

8.42

8.11

8.11

Spread in bps (10Yr Indian-10 US)

503

507

509

514

499

496

Credit/Deposit Ratio

75.33

76.90

76.99

USD LIBOR (3 month)

1.7144

2.3589

2.3558

2.3563

2.3545

2.3460

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

15-Jun-18

24-May-19

31-May-19

07-Jun-19

14-Jun-19

NSE Index

10,817.00

11,844.10

11,922.80

11,870.65

11,823.00

NSE Index Return

0.46

3.83

0.66

-0.44

-0.40

BSE Index

35,622.14

39,434.72

39,714.20

39,615.90

39,452.07

BSE Index Return

0.50

3.96

0.71

-0.25

-0.41


Liquidity Operation by RBI

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


Corporate debt (in Rs. Lakh Cr)


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


Commodity Price Index (3 Month Moving Average)


Commodity Price Movement (3 Month Moving Average)


USD-INR Movement

Source: RBI, Acuité Research

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